Govt may relax mandatory 30% local sourcing norms for single-brand retailers to attract big foreign players

Single-brand foreign retailers may be allowed to adjust the incremental sourcing of goods from India for global operations during the initial 10 years

Press Trust of India January 24, 2019 08:03:59 IST
Govt may relax mandatory 30% local sourcing norms for single-brand retailers to attract big foreign players
  • Big single-brand retail firms may also be permitted to open online stores before setting up brick-and-mortar shops

  • Currently, online sale by a single-brand retail player is allowed only after opening of physical outlet

  • The relaxation would be subject to condition that a foreign entity would have to bring FDI in excess of $200 million

New Delhi: In order to attract big foreign players in the single-brand retail sector, the government is considering measures to relax the mandatory 30 percent local sourcing norms by allowing them more time to comply with the regulations, sources said.

Big single-brand retail firms may also be permitted to open online stores before setting up brick-and-mortar shops.

Currently, online sale by a single-brand retail player is allowed only after opening of physical outlet.

As per a proposal under active consideration of the government, single-brand foreign retailers may be allowed to adjust the incremental sourcing of goods from India for global operations during the initial 10 years from the current five years (beginning 1 April of the year of the opening of first store) against the mandatory sourcing requirement of 30 percent of purchases from India, they added.

Govt may relax mandatory 30 local sourcing norms for singlebrand retailers to attract big foreign players

Representational image. Reuters

The relaxation, however, would be subject to a condition that a foreign entity would have to bring foreign direct investment (FDI) in excess of $200 million within the first 2-3 years.

The move is aimed at attracting big players in the sector. The proposal requires approval of the union cabinet for implementation.

In January 2018, the government allowed 100 percent FDI in the sector, permitting foreign players in single-brand retail trade to set up own shops in India without government approval.

That time, the government also relaxed mandatory local sourcing requirement of 30 percent by stating that a foreign retailer would be able to get credit from incremental increase in sourcing for its global operations from India towards the mandatory 30 percent local sourcing requirement for its business in the country.

During April-June 2018-19, FDI in India grew by 23 percent to $12.75 billion. The Commerce and Industry Ministry has not released the foreign investment data after June 2018.

 

 

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