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