Many months after issuing the final guidelines, the government yesterday clarified that the multi-brand retail store set up by a global retail entity will have to be 'company owned and company operated'and not operated by any franchisee.
It said this in a clarification on queries of prospective investors/stakeholders on FDI policy for multi-brand retail trading. The Department of Industrial Policy and Promotion, the nodal body that clears foreign investment proposals, also said the 30 per cent sourcing rider will be considered fulfilled only if it is implemented for front end stores. It said multi-brand retailing entity cannot engage in any other form of distribution and the entire investment in back-end infrastructure has to be an additionality .
The mere acquisition of supply chain or back end asset from an existing company would not be counted towards the mandatory back end investment requirement. "The entity can invest only in greenfield (new) assets and it will not be possible to acquire supply/chain/back end assets," it said.
