Srinisspace - India opens door for more FDI

Prior to 2015, starting a store in India was difficult for single brand retailers. In 2015, our Government relaxed the e-commerce rules which allowed single brand retailers to start their business directly in Indian soil.

But it had some time delay that the brands had to open their physical stores before starting online sales. Last Wednesday, Commerce Minister Piyush Goyal announced several changes to FDI policies. Seems the reformations was considered by previous governments but unable to proceed due to various reasons. But it is implemented by our Government after their strong position in second term.

The new changes allows foreign single brand retailers to open their online sales before opening their physical stores. But they have to open it within 3 year. Anil Talreja (Delitte India – Partner) praises this move as “Before you touch the Indian soil, you can basically touch the Indian Consumer now”. The rule also implies that the brands have to procure 30% of goods/services from India irrespective of whether they sell in India or not.

The new rule is going to open doors for many foreign companies to have the online sales platform in India. Apple is planning to start their online store in next 3 to 5 months and their physical store in Mumbai in 18 months. Apple thanked our PM stating ” We appreciate the support and hard work by Prime Minister Modi and his team to make this possible and we look forward to one day welcoming customers to India’s first Apple retail store “. Now Apple has partnered with Amazon, Flipkart and PayTM mall for their sales.

Already IKEA and H&M have already started their online sales in India. It is also expected that Indian E-Commerce marked will hit $150 Billion in 2020 and the economic slowdown in China will draw the investors to India.