FDI in single brand retail: IKEA India, H&M welcome govt's move to ease global sourcing norms

New Delhi: Leading single-brand retailers hailed the government’s move to ease local sourcing norms and allow online sales, saying it is an encouraging step to attract investments in the sector. The government on Wednesday expanded the definition of mandatory 30 percent domestic sourcing norm. It also allowed single-brand retailers to start online sales, waiving the previous condition of setting up a mandatory brick-and-mortar store. Swedish fashion retailer Hennes & Mauritz (H&M) welcomed the government’s decision, saying it will help attract investment from global companies. “We are delighted! H&M has been sourcing from India since the last 30 years for its international markets, its great to see global sourcing is now part of the 30 percent local sourcing norms. “We see this supporting the ease of doing business in India and driving in larger investments from global companies,” H&M India Country Manager Janne Einola said. [caption id=“attachment_4928191” align=“alignleft” width=“380”] Representational image. IKEA India [/caption] The government has also decided to include global sourcing by the single-brand retailers for adjusting their 30 percent mandatory local sourcing norm. Terming the government’s move as “encouraging”, Swedish furniture giant IKEA has said that the move would enhance ease of doing business in India. “IKEA India welcomes the relaxation of local sourcing norms for single-brand retailers. Government of India’s efforts to enhance ease of doing business for single-brand retailers is encouraging. IKEA has been sourcing from India for more than 30 years,” said IKEA India in a statement. IKEA further said that it was committed to increase local sourcing from India. “We have ambitious and optimistic plans to work with affordability and offer everyday low prices for the many people in India,” it added. According to consulting firm Deloitte, it has brought goodies for the global retail companies whichever have been holding on their decisions to invest to tap the Indian market. “Allowance of seamless usage of the goods to be procured either for domestic or exports, relaxation of the current deadline of 5 years as well as determination of incremental sourcing, permission of sourcing of goods for global operations will go a long way to give a final nudge to the retailers to take this long-awaited decision,” said Deloitte India Partner Anil Talreja. KPMG said the move to add exports for adjusting local sourcing requirements will help to create larger capacities. “Adding exports to the local sourcing norms may help build larger capacities, reinforcing India’s stand as a potential global manufacturing hub,” said Harsha Razdan, Partner, Consumer Markets, Life Sciences and Internet Business, KPMG in India. Moreover, allowing single-brand retailers to start online stores, while meeting local sourcing norms would give them time to build their brick-and-mortar presence in parallel.