Textile Ministry for FDI in multibrand retail, but only in Indian apparel

The view is contrary to BJP's stance on the issue which was reiteriated by the Commerce Minister sometime back

The ministry of textiles under the newly formed BJP government has a contrarian view on the allowing foreign direct investment (FDI) in multi brand retail.

Contrary to the party’s policy for not allowing FDI in multiband retail, the ministry, in its strategy report for the sector has recommended FDI in single and multi brand retail under automatic route, albeit restricting its views only to Indian apparel brands.

At present, foreign direct investment policy does not allow any FDI in Indian brands or retail but only in foreign brand/retail, which is owned and operated by an international company.

On the other hand, the ministry is of the view that building brands and expanding retail footprint is capital intensive yet promotion of Indian brands in the domestic market needs to be supported with success in dedicated retail stores for single and multiple Indian brands.

It has further stated that the Turkish model for helping country’s brands to venture overseas is a good template, which can be adopted with suitable adjustments and modifications on a pilot basis to begin with.

The ministry has also come up with a proposal to conduct a scientific, systematic anthropometric study of Indian population for developing a standard Indian sizing system. Anthropometry refers to the measurement of the human individual and plays an important role in industrial design, clothing design, ergonomics and architecture where statistical data about the distribution of body dimensions in the population are used to optimize products.

Apparel available in Indian market

Today markets are either European or American size which does not fit body size of typical Indian person. Providing right size and fit to the market will promote domestic demand and sector growth, suggested the officials.

Meanwhile, the textile sector could diversify its export markets and goods category, suggested the strategy report. There are several finished goods categories such as suits, women’s western wear, intimate wear, swimwear, outerwear, etc which has multibillion dollar trade globally but India’s share in them is quite nominal.

Besides, there are several large markets like Japan, Russia, South Korea, Switzerland, etc. in which India’s trade share is very low.

Therefore, in order to increase India’s share, it is suggested that country specific export strategies should be developed and implemented. Under this strategy, initially four to five major markets should be identified in which share of Indian exports can be increased.

For each market, professional agencies should be hired from the target country to advice on the market specific strategy. However the report has added the caveat that while this may appear expensive, there is no real alternative for success of the kind envisaged.

Albeit, to promote exports in non-traditional products, the ministry has suggested to extend five year tax holiday for designated companies on exports of specific finished good items (apparel, made?ups and technical textiles), if their export growth is over 25% annually.