Retail FDI further liberalised
It’s unclear what the announcement is likely to be, but, there is anticipation that clarity would emerge on the following contentious issues :
1. Current policy doesn’t allow franchise model for multi brand retailing; govt wants to allow only serious investors who are willing to commit USD 100 million at the miminum in ‘owning’ retail outlets, to join the bandwagon.
2. Investors are not allowed to acquire existing back-end infrastructure; requirement is to develop and invest in green field investment up to a minimum of 50 percent of total FDI
3. Multi brand entity cannot leverage on local sourcing done by existing manufacturing /Whole sale venture.
Separately, insofar as single brand retailing is concerned, besides sourcing condition restriction, there is no clarity on whether products sold under sub-brand of internationally known brand can be allowed or not.
Mukesh Butani is Founder & Managing Partner of BMR Legal Advocates, a boutique law firm specializing in the areas of Corporate International Tax, Transfer Pricing, GST, Customs & Trade, with expertise in litigation services, controversy management, strategic transaction advisory and policy. With specialization in domestic corporate international tax and transfer pricing, he has over three decades of experience in advising multinationals and Indian conglomerates on wide range of matters relating to FDI policy, business re-organizations, cross-border tax structuring, tax controversy and regulatory policy. He is an acknowledged expert in the area of International Tax policy, controversy & advocacy, and has to his credit several landmark judicial pronouncements. He has deposed as Expert Witness on contentious cross-border tax treaty & TP matters in foreign jurisdictions. Mukesh is a qualified Chartered Accountant and holds bachelor's degree in Commerce and Law, and practices as an Advocate before various Tribunals, High Courts and the Supreme Court of India.