Puma & Adidas seek government's nod for e-commerce portals

German athletic footwear and apparel makers Puma and Adidas have sought the government's permission to operate their own e-commerce portals.

They are the first among foreign companies to take advantage of a change in law that allows single-brand overseas retailers to sell online as well in India, The Economic Times has reported.

The two firms have also sought clarification and approval from the government on whether their existing wholesale entities can engage in direct retailing and e-commerce.

"Based on the new regulation on single-brand retail, we have sought approval for Puma Sports India to do retail and e-commerce. The same entity was originally allowed to do wholesale of Puma products," said Abhishek Ganguly, Managing Director of Puma India.

Puma had filed an application on march 3 with the Department of Industrial Policy & Promotion (DIPP), the nodal agency for foreign direct investment in India. Adidas has sought a similar approval from the DIPP in an application on the same date.

In November 2015, the government had relaxed the rules for FDI in retail, permitting manufacturers to sell their products through wholesale, retail and e-commerce channel as well for the first time.

Even as India allowed single-brand retailers to set up their own stores, such companies also maintained wholesale subsidiaries to supply to their chain of franchisees.

That made things cumbersome as such companies had to set up separate entities for retail and wholesale, with different warehousing, inventory and accounting.

"The government's new FDI policy on single brand makes things easier and simpler for a foreign entity to invest in retail.

It will bring efficiency in supply chain, inventory, sourcing and generating employment in retail," Ganguly of Puma said. "It's a very progressive approach from the government. Once our approval comes through, it will make business much smoother for us."

Adidas had in November 2015 announced its intent to open its first fully-owned outlet in India in the second half of the fiscal, after it got clearance to invest in local retail operations.