What changed
Earlier, FDI up to 51% was permitted in single-brand product trading under the government route. The revised policy now allows FDI up to 100% in this sector, subject to conditions in Press Note No. 1 (2012 Series) dated January 10, 2012.
What it means for you
Banks handling foreign investment remittances must now process 100% FDI applications for single-brand retail under the government route, ensuring compliance with DIPP's press note conditions. This opens larger capital inflows for global single-brand retailers entering India, increasing demand for correspondent banking and FEMA advisory services.
What you must do
- Update internal FDI processing guidelines to reflect the 100% cap for single-brand retail under government route.
- Advise customers/constituents about the revised policy and the need for government approval as per Press Note No. 1 (2012 Series).
- Monitor RBI's separate notification amending FEMA 20/2000-RB for formal regulatory changes.
- Ensure all transactions comply with Sections 10(4) and 11(1) of FEMA, 1999.
Who it affects
AD Category-I banks, Foreign investors in single-brand retail, Indian single-brand retail entities seeking FDI
What is the new FDI limit for single-brand retail trading?
The limit has been increased from 51% to 100%, but all investments require prior government approval under the FDI scheme.
Do AD banks need to wait for FEMA amendment before processing applications?
The circular is effective immediately, but banks should note that formal amendments to FEMA 20/2000-RB are being notified separately. In practice, you can process applications based on the circular and press note.