India is all set to ease mandatory local sourcing norms for foreign direct investment (FDI) in single brand retail trading in the coming few weeks.
While addressing CEO’s multi- national companies in the UK-India Joint Economic and Trade Committee (JETCO) meeting held in London, Commerce and Industry Minister Piyush Goyal said, “India has opened up opportunities for single brand retail and is easing some detrimental clauses of the policy in next few weeks which will help single brand retail come in a bigger way to the country”.
The government in its recent budget proposed to ease local sourcing norms for foreign direct investment (FDI) in India in its single brand retail sector.
As per current norms and policies, 100 per cent FDI is permitted in the single brand retail sector with certain conditions in place, including 30 per cent mandatory local sourcing preferably from MSMEs.
Goyal also requested foreign companies to respect and understand Indian sensitivities on restrictions of overseas investments in multi brand retail.
“Particularly, e-commerce companies coming to India will have to ensure that they stay within the letter and spirit of the law when it comes to multi-brand retail and India’s policies around that,” he said.
He further added that manufacturing in India, in a cost-competitive environment, could be the key for British companies to expand their footprints to other parts of the world. “Designed in the UK—Made in India can be the new focus area for this partnership. Similarly, in the services sector, India can provide huge technical expertise to British companies,” the minister said.
Goyal also said that if the spirit of research and innovation in British industry and academia is bound together with the strength of the skilled Indian work force, the two countries may become the preferred supplier for the rest of the world. Both countries have agreed to set up three new bilateral working groups to tackle barriers in specific sectors including food and drink, healthcare and data services.
According to Finance Minister Sitharaman, multi-brand trading wasn’t going to be possible before farmers and retailers provided enough resources to face market competition.
Currently, the foreign direct investment policy concerning Indian multi- brand retail companies permits 51 per cent stake in the sector. BJP, in its election manifesto had opposed overseas investment in the retail sector. Trader bodies remain opposed against any steps towards further liberalizing the retail sector for FDI. While, 100 per cent foreign direct investment under the automatic route was allowed in single- brand retail last year, FDI in multi- brand continues to be restricted. Those opposed to a total freedom in FDI policies worry that opening the door to giant foreign investors may drive away consumers from their tiny outlets and departmental stores.