New Delhi: Ministry of Commerce has clarified that minimum local sourcing norms will be relaxed for foreign companies that are already procuring Indian goods and exporting finished products. The ministry statement clears ambiguity over sourcing norms for foreign players after the Union Cabinet approved 100 percent foreign direct investment (FDI) in single-brand retail trade.
In conversation with News18, a top official from the ministry of commerce said that the sourcing norms can be offset against products being sold in India.
Earlier, according to the FDI policy, foreign retail traders had to buy 30 percent local goods.
The official cited the example of IKEA and said companies that are not yet retailing but sourcing from India and are exporting finished goods will be provided the relaxation once they enter the retail trade.
The official explained that foreign retail giants had expressed their discomfort with the 30 percent rule stating they were already procuring raw materials from India, therefore, making it mandatory for them to buy local goods for their retail output would harm their businesses.
This is being done to “purely reward, encourage and acknowledge” global players to start the retail business in India, added the source close to the development.
The Narendra Modi government approved 100% foreign direct investment (FDI) in single-brand retail via the direct route, removing all hurdles for investment and opening the economy for global players.
The decision was taken during a Cabinet meeting chaired by Prime Minister Narendra Modi on Wednesday, days before his historic visit to the World Economic Forum in Davos, Switzerland, where India is the focus country this year.
Earlier, only 49% FDI was allowed through automatic route and government approval was required for 100% FDI in retail.
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