Retail brand clarity on way

R. SURYAMURTHY

New Delhi, June 9: The government plans to come out with clarifications that can allow single-brand retailers to sell sub-brands in their stores. The move follows objections of the finance ministry over the sale of sub-brands by UK-based retailer Marks & Spencer. The British apparel retailer, present through a joint venture with Reliance Retail, was selling sub-brands such as Indigo, Autograph and Limited Collection in its stores. Similarly, Spanish clothing company Inditex sells the Zara brand in partnership with Tata Group's Trent. However, Zara's products are branded as Zara Man and Zara Woman. Inditex-owned Massimo Dutti also has different brands for men and women, although both carry the parent brand's name in the prefix. "The department of industrial policy & promotion (DIPP) is working on clearly defining the term brand. This will eliminate the dilemma over the selling of sub-brands or labels under the ambit of the FDI policy in single-brand retailing," officials said. The current single-brand retail policy, which allows 100 per cent FDI, says retail goods should be sold under one brand name. The same brand name should also be used in global markets. It says that "single-brand retail trading will cover only products which are branded during manufacturing and the foreign investor should be the owner of the brand". For those retailers who propose to invest beyond 51 per cent, the policy has put in the condition of mandatory sourcing where at least 30 per cent of the value of products sold will have to be from domestic "small industries/village and cottage industries, artisans and craftsmen". Saloni Nangia, retail sector analyst with Technopak Advisors, said, "This is about creating a controversy where there is none. What it sells in its stores are all manufactured by M&S. Such government action could create roadblocks for serious foreign investors." In January last year, India hiked the foreign direct investment (FDI) cap in single-brand retail to 100 per cent from 51 per cent. So far, the government has approved 63 proposals of foreign companies for retailing in single brand. The government has come out with clarifications on the multi-brand retail sector, which has not attracted investment, though the sector was opened up in September. The DIPP has clarified that global retailers will need to set up fresh back-end infrastructure when they roll out front-end stores and reiterated that they must compulsorily source 30 per cent of the manufactured and processed products from small and medium enterprises. http://www.telegraphindia.com/1130610/jsp/business/story_16990438.jsp#.UbX3z-eBlA0