The Department of Industrial Policy and Promotion (DIPP) is learnt to have given its approval to Hennes & Mauritz AB’s Rs 700-crore (Rs 7 billion) investment proposal, almost six months after the Swedish clothing giant made an application to foray into the Indian single-brand retail market.
The Stockholm-headquartered iconic fashion company’s top brass, including chief executive Karl Johan Persson, is believed to have met DIPP officials last week.
After that, they might have sent their responses to the department, which had earlier raised certain questions on the application, submitted in April, according to officials in the ministry of commerce and industry.
“All issues sorted. Now it is for FIPB (Foreign Investment Promotion Board) to take it up in its next meeting,” a senior DIPP official told Business Standard.
FIPB, under the chairmanship of Economic Affairs Secretary Arvind Mayaram, is likely to consider the proposal at its meeting on October 18. Once FIPB gives its final approval, H&M will be allowed to open in the country the 50 stores it had proposed to set up.
H&M, famous for its bold prints and fast-fashion clothing, had sent ist application to DIPP in April, after which the latter had raised several questions on whether the company would be able to strictly adhere to the sourcing norms, in line with the FDI policy for single-brand retail.
According to the extant policy, foreign retailers investing more than 51 per cent can open outlets across the country on the condition that 30 per cent of their sourced sales would come from small- to medium-sized domestic enterprises.
DIPP also had concerns on the brand’s licensing agreement between the parent company and its investors. That has now been resolved.
Endorsed by the likes of super-model Gisele Bundchen and footballer David Beckham in international ad campaigns, H&M will invest euro 100 million in the first phase through its wholly-owned subsidiary.
This is second such proposal from Sweden and also the second largest. Earlier this year the Cabinet Committee on Economic Affairs had cleared furniture-maker Ikea’s Rs 10,500 crore (Rs 105 billion) proposal again a leading brand from Sweden but registered in Netherlands.