Reliance Industries Limited : India to Consider Brooks Brothers' Investment Proposal Friday - Official
10/17/2012| 02:09am US/Eastern
By Rajesh Roy
NEW DELHI--India's Foreign Investment Promotion Board will on Friday consider an application from U.S. luxury-clothing retailer Brooks Brothers Group Inc. to invest in a joint venture with Reliance Industries Ltd. (500325.BY), a senior finance ministry official said Wednesday.
Brooks Brothers has proposed to hold up to 51% of the joint venture that would sell the U.S. company's brand of products in India, the official, who didn't want to be named, told Dow Jones Newswires.
The official didn't provide further details.
Brooks Brothers, America's oldest clothing retailer, had in June announced its plan to set up the joint venture with Reliance Brands, a unit of Indian conglomerate Reliance Industries. "The Indian market is a natural next stop in the global expansion plans for Brooks Brothers," the company had said at that time.
Arthur Wayne, its vice president of global public relations, declined to comment Wednesday.
An executive at Reliance Industries said Reliance Brands plans to hold a 49% stake in the joint venture if Brooks Brothers' investment proposal gets India's clearance. The executive didn't want to be named.
Global retailers such as Brooks Brothers are looking to set up operations in India as the country's growing middle class increasingly adapts to western trends and tastes. India is Asia's third-largest economy and estimates show, despite a current slowdown, its market growth will continue to outpace most major economies for a while.
India last year allowed 100% foreign ownership in the single-brand retail segment, where a company sells only its own brand of goods. Previously, foreign companies could own only up to 51% of their Indian retail operations.
Still, U.K.-based footwear retailer Pavers England and Swedish furniture giant Ikea group are the only foreign single-brand retailers that have applied so far to set up fully controlled operations in India. Most foreign retailers prefer joint ventures with established local players to enter India's vast and diverse market.
The Foreign Investment Promotion Board, a government agency that regulates foreign investments into India, is likely to consider Friday Pavers England's application to invest $20 million, a government official said Monday.
The Ikea group's application to invest 1.5 billion euros ($1.9 billion) to set up 25 stores is currently with the Department of Industrial Policy and Promotion. Such proposals go to the Foreign Investment Promotion Board after they get the department's clearance.
Brooks Brothers, which introduced the first ready-to-wear suits in 1845, has outlets in the U.S., South Korea, Japan, China, Taiwan, Singapore, France and the U.K.
In addition to its iconic shirts and suits, Brooks Brothers sells other apparel and accessory categories and has a designer collection called Black Fleece, designed by Thom Browne.
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