India Waves In Single-Brand Retailers

Indian cities such as New Delhi will be seeing more foreign retailers with the passage of a new rule that lets single-brand companies like Starbucks, Ikea, and Nike operate independently in the country.

Image: Paul Prescott / Shutterstock

India, which did not allow single-brand foreign retailers to operate stores without a local partner has backed away from that decision, and will allow global companies such as Starbucks Corp., Ikea and Nike to operate independently in the country.

The Indian government on Tuesday ratified a November 24 cabinet decision to raise the ownership limit from 51 percent to 100 percent for single-brand retailers based outside of India. The new rules take effect immediately, but as part of the deal, companies must use smaller Indian companies for at least 30 percent of procurement.

The move will affect global companies and could also pave the way for entrepreneurs interested in the Indian market who want to tap into the wallets of India’s growing middle class.

Still excluded: Wal-Mart Stores, which currently operates in India through India partner Bharti Enterprises, and other foreign chains that are considered multi-brand retailers.

And one analyst who spoke to Bloomberg doesn’t see that changing:

"People think that this would lead to a positive stance on multi-brand retail soon," Sameer Narang, an Mumbai-based analyst with HDFC Securities Ltd. told Bloomberg. "My opinion is that it's not coming any time soon, given the way things went the last time the government tried to introduce it, I doubt a lot of traction will be seen on it."