India OK’s Bigger Foreign Retail Investment

The government of India has approved direct foreign investment by retail businesses up to 51%, but only for single-brand companies. India is the third-largest Asian economy, and continues to be wary of multi-brand retailers such as Wal-Mart, Carrefour, Tesco and JCPenney. The country enacted laws in 1997 regulating foreign retail investment to protect local retailers and limit a possible foreign exchange outflow. Industry analysts say that Gap, Disney, Nike, Zara, Guess and Ikea are studying India retail investments, and Wal-Mart just announced it will open a market research office there. The country has 300 million middle-class retail customers and last year’s $2.5 billion spent on luxury goods could increase quickly if foreign investment laws are loosened. Apple has not announced any retail interest in India, although it is certainly monitoring the country.

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