Strict rules

New Delhi, Nov. 2: Overseas retailers will not be allowed to sell a range of products under a single brand unless they do so in other markets.

The move is designed to stop the misuse of the single brand route — a pre-condition under which foreign retailers are allowed to invest up to 51 per cent in companies registered in India.

For example, Nike sells shoes and apparel under the eponymous brand in all its markets and will be allowed entry while multi-brand retailers like Tesco will be kept out.

The guidelines for FDI in retail were announced in February 2006. On Monday, the Congress-led government issued a clarification, which said “products sold under the same brand internationally means that the products are sold under the same brand in one or more countries other than India”. The clarification was issued by the department of industrial policy and promotion in the commerce ministry

Under the guidelines, products sold by such ventures should be branded at the manufacturing stage itself.

“Keeping in view the kind of applications we are receiving and strong political opposition to the possibility of foreign retailers misusing the single brand window, the ministry decided to clarify conditions required for entry into this kind of retail,” said ministry officials.

Although FDI in retail is not allowed, the government has been facing criticism over the way cash-and-carry retailers are violating the terms of their licences.

Cash-and-carry is a wholesale trading operation under which entities like Metro AG are not allowed to sell their products to retail buyers.

The Left, which has been opposing in retail, has been arguing that several retailers players are violating the single brand condition.

Sources said the number of queries from foreign companies about the single-brand window — one of two options for foreign investors to tap into the retail market — had been growing significantly, compelling the government to explain its litmus test.