Sweden's H&M ready to roll, but no word from FIPB yet

H&M is the second largest single-brand FDI proposal after the Rs 10,500-crore application made by yet another Swedish chain IKEA

At a time when multi-brand foreign retail chains such as Walmart, Carrefour and Tesco are not willing to invest in India, leading Swedish fashion group Hennes & Mauritz (H&M) is believed to be ready to set up stores in India. But H&M’s proposal, made four months ago to the Department of Industrial Policy and Promotion (DIPP) to invest over Rs 700 crore in the country as 100 per cent foreign direct investment (FDI), is yet to be cleared.

Once the DIPP approves the application, it will be taken up by the Foreign Investment Promotion Board (FIPB), the key unit in the finance ministry for vetting FDI proposals.

H&M is the second largest single-brand FDI proposal after the Rs 10,500-crore application made by yet another Swedish chain IKEA. While IKEA is scouting for real estate, mostly around the outskirts of metros, and has said it could take two to three years to set up its initial stores in India, industry sources said H&M would take less than half of that time to begin its operations in the country.

“H&M is awaiting a nod from the FIPB,” said Diljeet Titus, founder and managing partner, Titus & Co Advocates, the law firm advising companies such as IKEA and H&M for India entry. Once approval is granted, H&M will immediately execute its plans to set up stores, Titus told Business Standard. While he refused to elaborate on where the stores could open, market sources said the group was in advanced talks to take up space in many metros and tier one cities. H&M, which competes with the likes of fashion brands such as Spain’s Zara, wants to open 50 stores in India over a period of time. While Zara already operates in India through a tie-up with the Tatas, a proposal from the group’s Massimo Dutti brand is expected to be taken up by the FIPB this week.  

Around the world, H&M has over 2,500 stores across 49 markets. Germany is its topmost  market, followed by the US, the UK and France. Apart from H&M, the group has brands including COS, Monki, Weekday and Cheap Monday and Other Stories.  Ever since the government stepped up the foreign direct investment cap to 100 per cent from 51 per cent earlier in single brand retail, there have been many applications from foreign investors in the category. In contrast, there’s not even a single application in the multi-brand segment.