New Delhi, Feb. 14: The government today issued a notification allowing foreign direct investment in retail and permitting multinational companies to open single-brand stores.

The notification ? press note 3 of 2006 ? with immediate effect, says foreign direct investment (FDI) in retail will be allowed only with prior government approval and multinationals can sell multiple products under a single brand in the country but not multiple brands through one store.

It states that FDI of up to 51 per cent in retail trade of single-brand products will cover only those that are sold under the same brand internationally and are branded during manufacturing.

This means a company cannot simply source goods from a third party, brand them and sell through these outlets.

According to guidelines, the application for retail FDI will have to specifically indicate “the product or product categories which are proposed to be sold under a single brand”.