Executive Briefings

Good News for Starbucks, Ikea and Some Others: India Lets Them Operate Without a Local Partner

India has abandoned a rule against foreign single-brand retailers operating stores without a local partner, paving the way for global companies, including Starbucks Corp. and Ikea.

The government ratified a Nov. 24 cabinet decision to raise the ownership limit to 100 percent from 51 percent for single- brand, Trade Minister Anand Sharma said in a statement. The new rules take effect immediately and require the companies to use smaller Indian companies for at least 30 percent of procurement, he said.

Wal-Mart Stores Inc., Carrefour SA and other foreign chains are still excluded from India's $400bn retail market after an attempt last year to change the law failed.

"This is a welcome move with a clear potential to lift the general mood in the economy," Rajan Bharti Mittal, managing director at Bharti Enterprises, Wal-Mart's Indian partner for wholesale hypermarkets, said in an e-mailed statement. "We hope the initiative is a precursor to further liberalization in the sector in the days to come."

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India has abandoned a rule against foreign single-brand retailers operating stores without a local partner, paving the way for global companies, including Starbucks Corp. and Ikea.

The government ratified a Nov. 24 cabinet decision to raise the ownership limit to 100 percent from 51 percent for single- brand, Trade Minister Anand Sharma said in a statement. The new rules take effect immediately and require the companies to use smaller Indian companies for at least 30 percent of procurement, he said.

Wal-Mart Stores Inc., Carrefour SA and other foreign chains are still excluded from India's $400bn retail market after an attempt last year to change the law failed.

"This is a welcome move with a clear potential to lift the general mood in the economy," Rajan Bharti Mittal, managing director at Bharti Enterprises, Wal-Mart's Indian partner for wholesale hypermarkets, said in an e-mailed statement. "We hope the initiative is a precursor to further liberalization in the sector in the days to come."

Read Full Article