The Indian government has given clothing company Benetton Group SpA the go-ahead to buy DCM's 50 per cent stake in the joint venture company DCM Benetton India.

The government previously delayed the proposal to make Benetton India a wholly owned subsidiary because it believed it could be tantamount to an illicit entry into retail.

However, it has now given its backing to the move, on the condition that Benetton Spa won't enter into retail trading.

Benetton will now be able to manufacture its clothes in India but will not be able to sell them there. It will have to change its company-managed or leased shops into franchised stores or close them.

It currently has about 60 stores in India, 5 per cent of which are company managed.