Retail Franchising and FDI Policy in India

Abstract

India is ranked at No. 1 for starting a Retail business across the globe. Retail in India, mostly an unorganized business, is an estimated $590 billion market. As per the current regulatory regime, retail trading (except under single-brand product retailing — FDI up to 51 per cent, under the Government route) is prohibited in India. Simply put, for a company to be able to get foreign funding, products sold by it to the general public should only be of a ‘single-brand’; this condition being in addition to a few other conditions to be adhered to. That explains why we do not have a Gucci in India. The Vodafone Judgement coinciding with the entry of Starbucks in India showcases the issue of FDI’s in retail sector through means and modes of franchising or Joint Ventures.