In­dia: Fast-fash­ion brands to ben­e­fit from re­laxed FDI norms

Stitch World - - NEWS TRACK -

Global fast-fash­ion ma­jors will be greatly ben­e­fited by re­cent changes in For­eign Di­rect In­vest­ment (FDI) pol­icy for sin­gle-brand re­tail trade (SBRT) in In­dia, says a re­port by BMI Re­search, a Fitch Group com­pany.

In a ma­jor pol­icy shift, the Gov­ern­ment of In­dia has fur­ther re­laxed the FDI norms by per­mit­ting 100 per cent for­eign in­vest­ment in SRBT that will al­low in­ter­na­tional play­ers to set up own shops in the coun­try with­out Gov­ern­ment’s sanc­tion. The an­nounce­ment to this ef­fect was made last week. In­dia’s im­proved po­si­tion on the World Bank’s ‘Ease of Do­ing Busi­ness’ rank­ing – mov­ing up 30 places to rank 100 out of 190 coun­tries – will also give a huge fil­lip to for­eign in­vest­ment in the coun­try, the re­port claims.

No­tice­ably, the Gov­ern­ment has also eased com­pul­sory lo­cal sourc­ing re­quire­ment of 30 per cent, which has been a long-es­tab­lished de­mand from for­eign play­ers like IKEA and H&M.

“We be­lieve that re­cent changes to this pol­icy will bode par­tic­u­larly well for fast-fash­ion ma­jors look­ing to ex­pand in In­dia”, the re­port states.

The re­port fur­ther men­tions that fac­tors like a large young adult con­sumer base, ris­ing dis­pos­able in­come and growth in the mid­dle-in­come seg­ment make In­dia a ‘favourable mar­ket’ for the fash­ion re­tail­ers.

Young adults are the core tar­get group for the fast­fash­ion brands owing to their strong in­ter­est in fash­ion­able yet af­ford­able ap­par­els, it men­tions. And with ris­ing dis­pos­able in­come, In­dian con­sumers will be able to spend a greater share of their in­come on non-es­sen­tial goods and ser­vices.

Fast-fash­ion brands are eye­ing young adults owing to their keen in­ter­est in fash­ion

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