Skechers, Kiko get Nod for Single Brand Retail
DIPP has taken over clearances from the FIPB for fast-tracking of all such FDI proposals
Ruchika Chitravanshi & Deepshikha Sikarwar
New Delhi: In a big push to foreign direct investment in single-brand retail, footwear maker Skechers USA Inc. and Italian cosmetic brand Kiko have secured the government’s approval to open outlets in the country.
Proposals of Nike, the world’s biggest maker of sports goods, and Germany’s Puma have received the Department of Industrial Policy and Promotion’s consent and have been sent to the finance ministry for final clearances.
To fast-track single-brand retail proposals, DIPP now examines all applications and forwards them to the Department of Economic Affairs for the finance minister’s nod. The Foreign Investment Promotion Board does not scrutinise these proposals. India allows up to 49% of foreign direct investment in single-brand retailing under automatic route and approval has to be taken for higher levels. Companies are required to comply with a 30% domestic sourcing norm for investments exceeding 51%.
Approval for Skechers and Kiko comes almost nine months after they filed applications to open their stores. The companies will also be allowed to sell their products directly online after opening their brick-and-mortar stores.
Skechers, a $3 billion company headquartered in Manhattan Beach, California, has a presence in more than 160 countries. Kiko Milano will sell its cosmetics and beauty and skin care products.
A proposal from Italian luxury apparel company Grotto, which owns brands such as Gas Jeans, has been referred back to the DIPP by the economic affairs department, which sought clarifications on the company’s application seeking changes to ensure compliance with the Foreign Exchange Management Act.
The government relaxed FDI rules for single-brand retailing in November and allowed companies to sell through wholesale, retail and ecommerce channels.
“It has been decided that an entity which has been granted permission to undertake SBRT (single brand retail trading) will be permitted to undertake ecommerce activities,” DIPP said.
FDI inflows into the country increased 37% to $39.32 billion in 2015. For the year 2015-16 up to January, the DIPP received 424 FDI proposals, of which 285 worth .₹ 48,000 crore were disposed of.