Single brand retail: Government rules out easing sourcing norms.

New Delhi: The government has ruled out any relaxation in the mandatory sourcing norm for global retailers who want to set up fully-owned single-brand retail stores in the country, but there could be fresh guidelines to provide more clarity.

"We are not talking of any dilution. We are talking of clarity...We are very clear that 30% of the sourcing has to be from India primarily from micro, small and medium enterprises," commerce and industry minister Anand Sharma told reporters at an event organised by industry chamber Ficci.

Swedish furniture retailer IKEA, which has proposed to invest 10,500 crore up single-brand retail stores in India, had sought relaxation in the 30% mandatory sourcing from small industry. The minister said the rules for 100% FDI in single brand retail will not be referred back to the Union Cabinet for changes.

"Cabinet decision is taken," the minister said, adding that if there is any clarity required it would be done through guidelines. "If we feel that there is a need of clarity to ensure that their investments are facilitated we will do that," Sharma said. Sharma did not reply to questions about MSME minister Vayalar Ravi's opposition to any change in sourcing rules.

"Policy is meant to attract investments. As long as the sourcing is from India, I am not going to get into any quarrel over technicalities," he said. The minister said that major retailers in the single brand are already sourcing from India. Swedish home furnishing major IKEA sources products worth e1 billion from India mainly from handloom and carpet clusters, he said.

As per the present single-brand FDI policy, global retailers would have to source 30% of their requirement from Indian small industries defined as those with total investment in plant and machinery not exceeding $1 million. IKEA has asked the government that it must be allowed to continue sourcing from small units even after the vendors have crossed the $1 million investment limit. It has also proposed that the calculation of the 30% norm be done for cumulative periods of 10 years of operations starting with the approval of the present application.

Source : economictimes.indiatimes.com