Government of India
Ministry of Commerce & Industry
Department of Industrial Policy & Promotion
(FC-I Section)
Press Note No.5 (2012 Series)
Subject: Review of the policy on Foreign Direct
Investment- allowing FDI in Multi-Brand Retail
Trading.
1.0 Present Position:
Foreign Direct Investment
(FDI) is prohibited in retail trading, except in single-brand product
retail trading, in which
FDI, up to 100%, is permitted, under the Government route, subject to
specified conditions.
2.0 Revised Position:
The Government of India has reviewed the extant policy
on FDI and decided to permit FDI,
up to 51%, under the Government route, in Multi-Brand
Retail Trading, subject to specified
conditions.
3.0 Accordingly, the
following amendment is made in 'Circular 1of 2012- Consolidated FDI
Policy', issued on
10.04.2012, by the Department ofIndustrial Policy & Promotion:
3.1 Paragraph 6.1 -
'Prohibited Sectors', is substituted with the following:
"6.1 PROHIBITED
SECTORS:
FDI is prohibited in:
(a) Lottery Business,
including Government /private lottery, online lotteries, etc.
(b) Gambling and Betting,
including casinos etc.
(c) Chit funds
(d) Nidhi company
(e) Trading in
Transferable Development Rights (TDRs)
(f) Real Estate Business
or Construction of Farm Houses
(g) Manufacturing of
Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco
substitutes
(h) Activities / sectors
not open to private sector investment e.g. Atomic Energy and Railway
Transport (other than Mass
Rapid Transport Systems).
Foreign technology
collaboration in any form, including licensing for franchise,
trademark, brand name,
management contract, is also prohibited for Lottery Business and
Gambling and Betting
activities."
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3.2 A new paragraph as
paragraph 6.2.16.5 is inserted below paragraph 6.2.16.4 as below:
6.2.16.5 Multi Brand
Retail Trading I 51% I Government
(l) FDI in multi brand
retail trading, in all products, will be permitted,
subject to the following
conditions:
(i) Fresh agricultural
produce, including fruits, vegetables, flowers,
grains, pulses, fresh
poultry, fishery and meat products, may be
unbranded.
G) Minimum amount to be
brought in, as FDI, by the foreign investor,
would be US $ 100 million.
(iii) At least 50% of
total FDI brought in shall be invested in 'backend
infrastructure' within
three years of the first tranche of FDI, where
'back-end infrastructure'
will include capital expenditure on all
activities, excluding that
on front-end units; for instance, back-end
infrastructure will
include investment made towards processing,
manufacturing,
distribution, design improvement, quality control,
packaging, logistics,
storage, ware-house, agriculture market produce
infrastructure etc.
Expenditure on land cost and rentals, if any, will
not be counted for
purposes of back end infrastructure.
(iv) At least 30% of the
value of procurement of manufactured! processed
products purchased shall
be sourced from Indian 'small industries'
which have a total
investment in plant & machinery not exceeding US
$ .1.00 million. This
valuation refers to the value at the time of
installation, without
providing for depreciation. Further, if at any point
in time, this valuation is
exceeded, the industry shall not qualify as a
'small industry' for this
purpose. This procurement requirement would
have to be met, in the
first instance, as an average of five years' total
value of the manufactured!
processed products purchased, beginning
1st April of the year
during which the first tranche of FDI is received.
Thereafter, it would have
to be met on an annual basis.
(v) Self-certification by
the company, to ensure compliance of the
conditions at serial nos.
(ii), (iii) and (iv) above, which could be crosschecked, as and when required.
Accordingly, the investors shall
maintain accounts, duly
certified by statutory auditors.
(vi) Retail sales outlets
may be set up only in cities with a population of
more than 10 lakh as per
2011 Census and may also cover an area of
10 kms around the
municipal/urban agglomeration limits of such
cities; retail locations
will be restricted to conforming areas as per the
Master/Zonal Plans of the
concerned cities and provision will be made
for requisite facilities
such as transport connectivity and parking; In
States/ Union Territories
not having cities with population of more
than 10 lakh as per 2011
Census, retail sales outlets may be set up in
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(vii) Government will have
the first right to procurement of agricultural
products.
the cities of their
choice, preferably the largest city and may also cover
an area of 10 kms around
the municipal/urban agglomeration limits of
such cities. The locations
of such outlets will be restricted to
conforming areas, as per
the Master/Zonal Plans of the concerned
cities and provision will
be made for requisite facilities such as
transport connectivity and
parking.
(viii) The above policy is
an enabling policy only and the State
GovernmentslUnion
Territories would be free to take their own
decisions in regard to
implementation of the policy. Therefore, retail
sales outlets may be set
up in those StateslUnion Territories which
have agreed, or agree in
future, to allow FDI in MBRT under this
policy. The list of
StateslUnion Territories which have conveyed their
agreement is annexed. Such
agreement, in future, to permit
establishment of retail
outlets under this policy, would be conveyed to
the Government of India
through the Department of Industrial Policy
& Promotion and
additions would be made to the annexed list
accordingly. The
establishment of the retail sales outlets will be in
compliance of applicable
StatelUnion Territory laws/ regulations, such
as the Shops and
Establishments Act etc.
(ix) Retail trading, in
any form, by means of e-commerce, would not be
permissible, for companies
with FDI, engaged in the activity of multibrand retail trading.
(x) Applications would be
processed in the Department of Industrial Policy
& Promotion, to
determine whether the proposed investment satisfies
the notified guidelines,
before being considered by the FIPB for
Government approval.
4.0 The above decision
will take immediate effect.
Joint Secretary to Govt of
India
D/o IPP File No.:
5/12//201O-FC-I dated: 20th September, 2012
Copy forwarded to:
1. Press Information
Officer, Press Information Bureau- for giving wide publicity to the above
Press Note.
2. BE Section in the Department
of Industrial Policy and Promotion- for uploading the Press
Note on DIPP's website.
Page 3 of4
ANNEXURE
LIST OF STATES/ UNION
TERRITORIES AS MENTIONED IN
PARAGRAPH
6.2.16.5(l)(viii)
1. Andhra Pradesh
2. Assam
3. Delhi
4. Haryana
5. Jammu & Kashmir
6. Maharashtra
7. Manipur
8. Rajasthan
9. Uttarakhand
10. Daman & Diu and
Dadra and Nagar Haveli (Union Territories)
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(Source: :http://dipp.nic.in/English/acts_rules/Press_Notes/pn5_2012.pdf)
