No More ‘Singling’ Out: Government To Relax Local Sourcing Requirements For Single-Brand Retail
The Union government is considering a proposal to relax the local sourcing requirements for foreign direct investment (FDI) in single-brand retail trade (SBRT) in India, reports Business Standard.
The proposal under consideration gives foreign retailers and brands more time to comply with the mandatory sourcing requirement. Initially, the government allowed 100 per cent FDI in SBRT only if the brand/firm agreed to source thirty per cent of purchases from India before opening its first store in the country.
The current proposal aims to give foreign entities upto ten years for incremental domestic sourcing, after which the thirty per cent rule will apply. The rule mandates that thirty per cent of the brands business in India be sourced locally.
The government is also expected to allow single-brand foreign entities to sell their goods online without having to first establish a brick-and-mortar physical store, which was the case earlier. These relaxed norms will only apply to investments of over $200 million within the first two-three years.
Gradual Rise In FDI
During 2014-15, India received total FDI inflows of $45.15 billion as against $36.05 billion in 2013-14. During 2015-16, the inflows increased to $55.46 billion. Following the trend, in 2016-17, India received $60.08 billion. This was the highest-ever FDI inflows into the country in a single fiscal year.