Zara owner faces roadblock in India

Source:Reuters Published: 2012-7-25 22:50:04

Spain's Inditex SA, the world's largest clothing retailer, 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.

An application by Inditex unit Zara Holdings BV to sell a more upscale brand through a joint venture with Tata Group's retail arm, Trent Ltd, was rejected by the Foreign Investment Promotion Board (FIPB).

The board didn't explain its decision, announced late Tuesday.

In January, India allowed foreign single-brand retailers to set up wholly owned operations in India, but a requirement that companies source 30 percent from small local firms has discouraged retailers from applying.

Only Ikea and Pavers, a British shoe chain, have applied so far, hoping to bank in on rising middle-class incomes and an expanding appetite for global brands and lifestyles.


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