As we all know that foreign investment has gained massive popularity in current times due to the rising trend of globalization and free trade. The foreign investors and organizations are required to properly navigate the FDI policies of different country to enhance and establish their business operations in another country. The regulatory framework of India concerning FDI policies is one of the most complex frameworks in the world. However, the reward for navigating the FDI policies include higher decision making autonomy and increased profit potential for foreign investors.
Single and multi-brand
As the Indian government categorize retail businesses as a single brand and multi-brand, the foreign business-owning multiple brands is required to take FDI approval for every single brand. The foreign investor can obtain the FDI approval in India through two routes, i.e. Government route and automatic route. Also, India allows 49 % of FDI for single-brandretail. In addition to this, India permits 51 % FDI in multi-brand, 100 % FDI in e-commerce retail, 100 % FDI in multi-brand food retail and 100 % FDI in single-brand retail with government approval. Further, the foreign firm must source a minimum of 30 % of material from India in the first five years of establishing the business in India.
Guidelines to navigate FDI policies
The key measures that can be taken by foreign investors while investing in India include understanding the regulatory framework, reviewing the critical policies, interpreting regulations, evaluating market-related opportunities and building up commercial protections. Since the main problem faced in India is supply chain issues. The foreign company can also partner with the local companies to deal with various supply chain disruptions in India. The local company may become supplier later, and the foreign company may establish its business as the wholly-owned company once the partnership with local company succeeds. This way, the foreign firm can developdeeper relations with domestic partners forthe long term and mutual benefits.