The Indian government has given its approval to the proposal to allow 100% foreign direct investment in single-brand retail in the country.

The move will allow foreign retail brands such as Marks & Spencer, Burberry and Louis Vuitton to operate independently in the country and the companies are likely to convert their 51 per cent stake in joint ventures to a 100 share in order to own the companies running their stores in the multi billion dollar Indian retail market.

The cap of 51 per cent on investment by single brand retail in the country had discourages many international firms to enter the country. According to the latest data, the FDI in single brand retail in India has been a low Rs 196 crore due to restrictions in place in the policy.

The approval comes with the condition that the foreign players will have to source at least 30% locally. Many believe that this may act as a deterrent to some of major brands planning to enter the country’s retail market.

Meanwhile, the retail stocks of firm including Pantaloon Retail India Ltd, Shoppers Stop, Koutons and Vishal retail rose on Wednesday following the approval from the government.