DIPP allows Zara owner to set up Massimo Dutti stores

In a move that will bring cheer to Spanish brand Zara, the Department of Industrial Policy and Promotion (DIPP) has done away with the norm that the foreign investor has to own the brand it proposes to sell, reports CNBC TV 18’s Rituparna Bhuyan.

Realising that often investment and ownership arms are separate when it comes to single brand retail, the DIPP has brought about the change in the policy. This will allow Spain’s Inditex to retail Massimo Dutti.

The company had hit an investment roadblock in India as the government gave the thumbs-down to its plan to sell Massimo Dutti apparel following the success with its flagship Zara brand.

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Earlier, the FIPB, which clears foreign direct investment proposals, had put the application on hold, citing violation of a rule that says an investor must own the brand it is proposing to bring to India, according to media reports.

But post the change in the norm, Inditex can apply to FIPB again. The application of the Spanish company was earlier rejected as it violated the FDI rule. “Now we have relaxed that particular rule. Zara can reapply to set up stores,” Secretary in the department, Saurabh Chandra, said.

DIPP has said that although domestic sourcing for single brand retailers is mandatory, they need not source from MSMEs alone but it must be their first priority.

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With inputs from Agencies