India To Consider Proposal To Relax Local Sourcing Norms For FDI In Single Brand Retail
As per the proposal, single-brand retail firms will be permitted to open online stores before setting up brick-and-mortar shops.
India will soon consider a proposal to relax local sourcing norms for foreign direct investment in single-brand retail, government sources said on Sunday.
The move comes in the backdrop of announcements made by the government in Union Budget 2019. In her budget speech on July 5, Union Finance Minister Nirmala Sitharaman had said that local sourcing norms will be eased for FDI in single-brand retail.
According to the proposal, single-brand retail firms would also be permitted to open online stores before setting up brick-and-mortar shops. Currently, online sales by a single-brand retail firm is allowed only after opening of a physical outlet.
Relaxations are expected in a provision where foreign retail traders are currently allowed to adjust procurement of goods from India for their global operations for meeting the mandatory 30 percent local sourcing requirement.
However, this is allowed only for five years and "incremental" sourcing of goods from India is only taken into account presently.
"Amendments and easing are also likely in this provision," the sources said.
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.
In February 2006, the government for the first time opened the sector for foreign players by allowing 51 percent FDI.
In January 2012, the cap was raised to 100 percent—up to 49 per cent through automatic route and beyond that with the government approval.