DIPP to Process All Single-Brand Retail Proposals Within 90 Days

July 30, 2014 Posted by India Briefing Reading Time: 3 minutes

The Department of Industrial Policy and Promotion (DIPP) has set a 90 day maximum time frame to process all outstanding FDI proposals in single-brand retail.

Under fire for delaying 13 applications to open single-brand retail outlets from several major foreign retailers including Forever 21, Furla and Swarovski, the DIPP is now attempting to fast-track its approval process to avoid further criticism.

“We will ensure zero pendency of applications at the DIPP and strict compliance to the [90 day] timeline from now on,” a DIPP department official said.

Under a new timeline expected to be implemented soon, the DIPP will process and forward applications to the Foreign Investment Promotion Board (FIPB) within 20 days. Incomplete applications will be returned to applicants during the same time period and a corrected application can be submitted within 30 days.

Applicants that do not respond to DIPP requests to rectify their application within a month will be granted an additional 20 days to comply.

“The 90 day timeline will include giving time and date to the applicant to visit [the] office to complete formalities [and] failing [to do so], the proposal will be rejected,” the DIPP official added.

According to the official, however, this new accelerated time frame will only apply to new proposals.

Considering that more than 3 billion foreign investment proposals in single-brand retail were submitted to the DIPP over the past two years – with applicants often being asked to provide scores of clarifications over several months – most companies feel an accelerated approval process is long overdue.

Damro, Barausse, Austria Puma, Richemont, Montblanc and Lush and Credo Brands are among foreign companies whose single-brand retail proposals have been stuck in DIPP limbo since 2013.

However, the DIPP insists that it is not completely to blame.

“Most proposals that come to DIPP are half banked, with some not committing to the conditionality. So, we will sit in partnership with these companies and ensure that they are in accordance with the existing policy,” DIPP secretary Amitabh Kant said, defending the institution.

This is not the first time since Narendra Modi’s election that DIPP policy has been thrust into the public eye. After claiming earlier this month that the surge in imports engendered by bilateral free trade agreements (FTAs) harms India’s manufacturing sector, Kant was recently called out publicly by Ministry of Commerce secretary Rajeev Kher for failing to provide facts that support his position.

“It is a myth that FTAs are harming domestic manufacturing. This has to be set right. We are committed to trade facilitation. While the last few years have not been good with declining exports, there are signs that there will be reasonable resurgence in foreign trade,” Kher said at a Confederation of Indian Industry (CII) event earlier this month.

So far this year, FDI inflows in India stand at US$24.29 billion.

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email india@dezshira.com or visit www.dezshira.com.

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