FDI: single brand retail businesses time to adhere to sourcing norms

By

Isabelle Crossley

Published
Feb 14, 2019

The Department for Promotion of Investment and Internal Trade has issued a cabinet note proposing that foreign direct investment - backed single brand companies are given more time to adhere to the new FDI norms requiring 30 percent local sourcing.

The government will consider a further clarification to the Department of Industrial Policy and Planning’s FDI norms to give single brand retail businesses ample time to begin sourcing 30 percent of their products in India. The amount of years a business will be given to set up units in India will depend on the amount of money it has invested, as reported by ET Bureau.

Currently, businesses are given up to five years to adhere to the FDI sourcing norms but the DPIIT has suggested that business should be given up to ten years. The move would intend to encourage international single brand retail stores to set up shop in India. If it goes through, new single brand fashion retailers could be encouraged to open stores in the country.

The DPIIT proposal posits that retailers investing up to $100 million (Rs 665.3 crore) in the sector will be given six years to meet the requirements, businesses investing $200 million will be given eight years, and those investing $300 million will be given 10. The FDI norms currently allow for 100 percent foreign investment in single brand retail under the automatic route but 30 percent of the products the brand sells in the country must be sourced in India itself.