Sourcing Norms for Single-Brand Retail Likely to be Reviewed #FDI

The rules and regulations with respect to the single brand retailing as a part of the Foreign Direct Investment(FDI) are likely to be reviewed as the Modi led government opposed FDI in multi-brand retail, seems to be planning to remove hurdles for international single-brand retailers, which are allowed up to 100 per cent FDI.

Even as some top international brands want to open fully owned businesses in India, mandatory sourcing norms have turned out to be the biggest hurdle for those into niche categories.

At present, though up to 100 per cent FDI is allowed in single-brand retail, only 49 per cent can come through the automatic route. The sourcing norms, which allow upto 51per cent FDI, stipulate that companies source from India 30 per cent of the value of goods purchased, preferably from micro, small and medium enterprises (MSMEs), village and cottage industries, artisans and craftsmen.

The sourcing rules were also reviewed by the previous government but the same was a total failure as there were a lot of obstacles involved for the foreign set ups to set up fully owned single brand retail businesses in India but the new Modi led government is planning that instead sourcing inputs from India, it would impart specialised and niche manpower training, set up centres of excellence (CoEs) and conduct community-based work programmes beyond their corporate social responsibility.