NEW DELHI: Some international retail brands operating in India, such as Zara and Marks & Spencer, are facing a possible threat to their business because of ambiguities in government policy around single-brand retail stores.
Questions have been raised by government departments regarding the status of sub-brands used by retailers granted only a single brand licence, the Economic Times has reported.
The Department of Industrial Policy & Promotion has advised the Department of Economic Affairs that "there is no legal entity such as 'sub-brands'" in the government's foreign direct investment policy.
And it noted that M&S does not use its brand name on sub-brands like Limited Collection, Autograph, Collezione and Blue Harbour.
Industry experts have argued that foreign direct investment policy – which states that products should be of a 'single brand' only – means that if a company owns multiple brands or sub-brands, they cannot legally offer more than one for sale.
M&S, which operates a 51:49 joint venture with Reliance Retail and currently has 24 stores in the country, indicated that it sold only M&S products "including our sub-brands, which are only available to buy at M&S".
Zara, whose products are branded as Zara Man and Zara Woman, has been credited with attracting more foreign brands to invest in India following the success of its partnership with Tata.
H&M, Promod, Fossil and Pavers are among the foreign fashion chains looking to set up single-brand retail (SBR) ventures in India following the relaxation of investment rules last year. So far, more than 60 SBR proposals have been approved.
The government is currently in the process of defining 'single brand retail' to remove uncertainties regarding the retailing of sub-brands and labels.
Data sourced from Economic Times; additional content by Warc staff