Fast Retailing Company owned Japanese brand Uniqlo has sought the Indian government’s approval to set up single brand retail stores in India and has accordingly submitted its proposal to the Department of Industrial Policy and Promotion (DIPP).
The company was expected to enter the Indian market this year but had kept it on hold citing location issues to set up their stores.
India has been identified as an important market by the company and the government nod will allow the firm to run a wholly-owned subsidiary, like other global rival Hennes and Mauritz (H&M) & Zara to set up stores in a country.
It however remains unclear as to how much the firm will be investing in India as an investment above 51% would mean that the company will have to source 30% from the Indian market.
As per the foreign direct investment (FDI) policy, 100% equity investment is allowed in single brand retail trading. FDI of up to 49% is permitted however in respect of proposals involving FDI beyond 51%, it is mandatory to source 30% of the value of goods purchased from India.
After posting strong results in the last financial year with net profit of $1.1 billion, Fast Retailing is expecting its global business to be bigger than Japan in the next fiscal and rapidly expanding its presence across the globe.
“Fast Retailing believes India is a market with great potential, and can confirm that the company has taken the first step towards a later introduction of UNIQLO to customers in India. At the moment, we are awaiting word from the government, and we will be able to discuss potential future steps at a later date,” a spokesperson of Fast Retailing in Tokyo was quoted to have said.
Uniqlo had earlier said that the company is reviewing the Indian market and will decide regarding its India entry at the right time amidst speculations of the brand foraying into the Indian market next year.