[India] Foreign Direct Investment (FDI) in Retail Sector in India

Author: Sanjana Tripathy Edited by Bob Tseng

Foreign companies invest in Multi Brand Retail Trading (“MBRT”) which is the sale of different products of different brands through one platform. MBRT includes convenience stores, supermarkets, and other stores which sell different products in one store. As per FDI Policy, 2020, 51% FDI is permitted under the government route subject to the following conditions:-

a. Fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery, and meat products, may be unbranded.

b. Minimum amount to be brought in by a foreign company would be US $ 100 million.

c. At least 50% of the minimum amount of FDI will be invested in back-end infrastructure within 3 years.

d. At least 30% procurement of manufactured/processed products shall be sourced from Indian micro, small and medium industries having total investment in plant & machinery not exceeding US $ 2.00 million.

e. Self-certification by the company for compliance of serial nos. (b) to (d) above, can be cross-checked whenever required.

f. Retail sales outlets may be set up only in cities with more than 10 lakh population (1 million) as per the 2011 census and may also cover 10 km area around municipal/urban agglomeration limits of such cities.

g. Government will have the first right to procure agricultural products.

h. Retail sales outlets may be set up in those States/Union Territories which have agreed to allow FDI in MBRT under this policy.

i. E-commerce is not allowed for companies with FDI, engaged in the activity of MBRT.

j. List of States/Union Territories, as mentioned in Paragraph (h), are:- 1. Andhra Pradesh, 2. Assam, 3. Delhi, 4. Haryana, 5. Himachal Pradesh, 6. Jammu & Kashmir, 7. Karnataka, 8. Maharashtra, 9. Manipur, 10. Rajasthan, 11. Uttarakhand, 12. Daman & Diu and Dadra and Nagar Haveli (Union Territories).