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Sourcing norms for single-brand retailers with FDI relaxed

Aug '19
Pic: Shutterstock
Pic: Shutterstock
India yesterday relaxed local sourcing norms for single-brand retailers with foreign direct investment (FDI) and allowed them to commence e-commerce operations before setting up brick-and-mortar stores, commerce minister Piyush Goyal announced after a cabinet meeting. The move is likely to benefit some big global retailers like H&M, IKEA and Uniqlo.

Single-brand retailers with over 51 per cent FDI now have to procure 30 per cent of value of goods from India. This can be met as an average during the first five years, and thereafter annually towards its Indian operations.

Local sourcing norms had been a concern for retailers in single-brand retail.

The Indian cabinet decided on August 28 that all procurements made from India by a single-brand retailer for that brand shall be counted towards local sourcing, irrespective of whether the goods procured are sold in India or exported, according to an official release.

It was also decided that sourcing of goods from India for global operations can be done directly by the entity undertaking single-brand retail or its group companies (resident or non-resident), or indirectly by them through a third party.

Currently, the policy provides that only a part of the global sourcing shall be counted towards local sourcing requirement, which is over and above the previous year’s value.

“It has been now decided that entire sourcing from India for global operations shall be considered towards local sourcing requirement," the government clarified.

Companies now applying for FDI in single-brand retail will also be allowed to sell online even before they set up physical stores, subject to the condition that they open physical stores within two years from the date of start of online retail. (DS)

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Fibre2Fashion News Desk – India

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