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Global single-brand retailers such as Marks & Spencer and Brooks Brothers will have to mark all sub-brand products sold at their Indian stores with their company logo, in addition to the logo of the sub-brands.
“While the Government has clarified that foreign single-brand retailers in the country will be free to sell sub-brands, provided they take approval for every product and product category being sold, the logo of the retailer has to be on every product,” a senior official of the Department of Industrial Policy & Promotion (DIPP) told Business Line .
This means that if UK-based Marks & Spencer wants to sell products of sub-brands such as Autograph, Collezione, North Coast and Blue Harbour at its stores in India, these products should also display the M&S logo, the official explained.
The Government allowed up to 51 per cent FDI in single-brand retail in 2011 and raised the cap to 100 per cent in September 2012, but there was lack of clarity on whether a single-brand retailer was allowed to sell products belonging to other brands.
This prompted the Finance Ministry to write to the DIPP asking if M&S, which is in India in a joint venture with Reliance brands, had flouted rules as it was selling sub-brands at its India stores.
The DIPP then came up with another clarification through a press note last month stating that applications for single-brand retail have to specifically indicate the product and product categories which are proposed to be sold under a single brand. Any addition to the product or product categories would require a fresh approval of the Government.
The press note also made it clear that one non-resident entity, whether owner of the brand or otherwise, shall be permitted to sell a specific brand through a legally tenable agreement with the brand owner.
India has been receiving a slew of applications from foreign single-brand retailers. The proposal for Rs 10,500-crore FDI from Swedish furniture maker IKEA was cleared earlier this year and the company is ready to set up shops. Other proposals that got cleared include those from British footwear retailer Pavers England, American luxury clothing retailer Brooks Brothers and Italian jewellery company Damiani.
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