Government may tweak single-brand retail policy

The Dollar Business Bureau

The government of India may give more time to global companies like Apple Inc. to abide by the sourcing norms for opening of single-brand retail stores in the country.

According to officials, the government is not in favor of diluting the mandatory 30 per cent local outsourcing. However, the government is open to the possibility of giving more time to such firms.

A finance ministry official said, “The Department of Industrial Policy and Promotion (DIPP) is looking to tweak the FDI policy on sourcing. 30 per cent local sourcing norm may not be changed, but the time given to comply might be relaxed."

The local sourcing norms have seen disagreement between the Commerce & Industry ministry and the Finance ministry. The Commerce ministry has recommended exempting Apple Inc. from this norm but the Ministry of Finance has rejected it.

Presently, 100 percent FDI is permitted in single-brand retail stores. But companies that exceed the limit of 49 percent are required to take permission from FIPB.

The proposal involving a foreign investment of more than 51 percent, sourcing of 30 percent of the value of goods purchased should be done from India and especially from MSME’s, cottage industries, craftsman and artisans in all the sectors.

The government has relaxed few FDI norms and has stated that it may relax the local mandatory sourcing norms for entities undertaking the single-brand retailing of the products having cutting edge technology and state-of-the-art and also where local sourcing is not possible.