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After reversing a decision to let foreign retailers expand in the country, India has opened the doors to 'single-brand' foreign retail chains by allowing them to own 100 percent of their Indian branches.

Previously, single brand retailers could only own up to a 51 percent stake in their Indian ventures.

The new policy, however, comes with conditions. Retailers who own more than 51 percent will be required to source 30 percent of their goods from domestic enterprises, a move aimed at creating jobs.

Experts, however, say compulsory local sourcing makes the policy a “a non-starter.”

“Big retailers buy from big suppliers. To expect them to buy from small suppliers is as silly as it can get. Whoever wrote this rule doesn’t understand the retail business, ” Arvind Singhal, chairman of Technopak Advisors, a consultancy firm in New Delhi whose clients include foreign retail chains, told Forbes.

The new policy encourages the likes of Swedish furniture giant IKEA to open stores in Asia's third-largest economy.
 

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