Update: Foreign Investment in Retail - OK, Perhaps a Bit Less Than Half Full

I noted the other day that the Indian government is going ahead with the further liberalization of "single brand" retailing - to 100% foreign equity from the current 51% limit - despite backtracking on efforts to allow any amount of foreign equity in "multi-brand" retailing.

With a catch. Foreign retailers that opt for 100% equity in single brand retailing must source 30% of the goods sold in the retail outlets from Indian small-scale producers.

Here are some quotes from the Economic Times:

"'It is going to be a challenge for most brands. I don't know if brands will change their global manufacturing processes for India,' said Sanjay Kapoor, managing director of Genesis Luxury, the joint venture partner of Burberry in India, which also represents other luxury brands like Canali, Jimmy Choo and Bottega Veneta." .  .  .

and also:

"'The scale of the Indian market is small at the moment for it to make sense of the luxury brands to start manufacturing in India, only for India,' said Neelesh Hundekari, principal at consulting firm AT Kearney."

As cross-border lawyers representing companies entering India and many other countries, we have found that foreign equity liberalization is often only part of the story - other restrictions can impede investment opportunities. For example, some years ago in Japan a liberalization to foreign retailers was in effect blocked by the ability of local Japanese retailers to veto a foreign retailer's entry on a number of very broad grounds.