Government looking at 'genuine concerns' of foreign retailers: Commerce and Industry Minister Anand .

ACCRA (GHANA): Hinting at a possible relaxation in sourcing norms for FDI in single brand retail, Commerce and Industry Minister Anand Sharma has said "genuine concerns" raised by investors need "to be looked at very carefully".

"There are some genuine concerns, which investors have made ... we are looking very closely at them ... that needs to be looked at very carefully," Sharma told PTI.

The minister was referring to issues raised by Swedish firm IKEA, which proposed to invest Rs 10,500 crore to set up single brand retail stores in India, over conditions for the 30 per cent sourcing of products from micro and small industries.

The furniture and home furnishing retail giant had asked the government that it must be allowed to continue sourcing from the small units even after the vendors have crossed the mandatory USD 1 million investment limit.

Sharma said the government was looking at the concerns and demands of the global retailers like IKEA on the issue of mandatory sourcing condition from small industries.

"IKEA is working very closely with different clusters in India like handloom and handicrafts. They are already sourcing from India. You have to recognise these things," said the minister, who was here for a two-day visit to inaugurate the 'India Show'.

Sharma said that IKEA is already sourcing products worth Rs 700 crore from India but he added that it would be difficult for high-end product manufacturers like watch makers to source from Indian small industries.

As per the present single brand FDI policy, global retailers would have to source 30 per cent of their requirement from Indian small industries which have a total investment in plant and machinery not exceeding USD 1 million.

In its application, IKEA had stated that if the group were to comply with this norm, such units would very soon outgrow the stipulated valuation (of USD 1 million) and become large set-ups.

When asked if the sourcing norms could also be relaxed in multi-brand retail, as and when global retailers are allowed in the segment, he ruled out such a step.

"The 30 per cent sourcing from Indian micro and small industry is mandatory ... there is no compromise on it," Sharma said, adding the interest of SMEs must be embraced in the policy.

Several big global retailers in single brand and multi-brand sector have expressed serious concerns over the mandatory sourcing norms.

Commenting on the progress on stakeholders' consultations for allowing 51 per cent FDI in multi-brand retail, Sharma said the process is going on and large number of states have supported the move.

"There is a strong consensus with principal stakeholders and large number of states ... I have spoken and written to many chief ministers," he added.

Sharma also said in order to take forward FDI in multi-brand retail, his ministry had written to five chief ministers already and would send letters to more.

Besides, Sharma said he would also meet West Bengal Chief Minister Mamata Banerjee in order to bring consensus on the highly politically sensitive issue.

Following strong protest from its key ally TMC, the government had put on hold the decision to allow global retail giants like Walmart and Carrefour to open stores in India.

He said that key stakeholders like farmers and the consumers are badly impacted in the absence of adequate processing facilities, infrastructure resulting in massive post-harvest losses.

"It is a national imperative to ensure that whatever is procured in the fields of the country, the farmers get remunerative prices. We have to attract investment for integrated value chain and assimilation of modern technology including cold chain infrastructure in various parts of the country," he added.

Source : economictimes.indiatimes.com