Government Approves 51% FDI in Multi-Brand Retail, 100% in Single Brand Retail
Today, Indian government has opened the gates for Walmart and TESCOs of the world to enter Indian market by allowing 51% FDI in retail. The cabinet has also allowed 100% FDI in single-brand retail, though the two recommendations come with riders like 50% of the investment and jobs should go to the rural areas, 30% of the inputs should be sourced from medium and small enterprises and investment in infrastructure.
What’s also important to note is that one of the riders of this recommendation is that such retail chains can only be opened in towns with population of more than 10 lakhs, restricting the target segment to only 51 towns in India.
What this means for ecommerce? For sure, expect more funding/investment in retail/ecommerce market, as investors have been waiting for increased FDI in Indian retail market. Most importantly, the 2% difference (earlier FDI was allowed for 49%) will redefine the ownership/decision making powers of foreign brands and expect companies like Amazon to further drive the pricing war and hence, consolidation in the coming days.
More details as we get them, but for sure these are exciting times in Indian retail/ecommerce market.