NEW DELHI: In view of the interest expressed by some big brands, including Apple, to set up manufacturing units in India, the government is considering relaxing regulations for single-brand retail, which make it mandatory for firms to source 30 per cent of the product locally.
In January 2018, the government allowed 100 per cent FDI in the sector, permitting foreign players in single-brand retail trade to set up their shops in India without government approval.
The government also relaxed the mandatory local sourcing requirement of 30 per cent by stating that a foreign retailer would be able to get credit from an incremental rise in sourcing for its global operations from India towards the mandatory 30 per cent local sourcing requirement for its business in the country.
Now the government is going to take it a step forward.
According to the fresh proposal, retail traders may be allowed to adjust the incremental sourcing of goods from India for global operations during the initial 6-10 years, from the current five years, against the mandatory requirement of 30 per cent sourcing from India.
This relaxation would be subject to the quantum of FDI in India.
While six years’ time would be given to a retailer that invests $100 million in the sector, eight years and 10 years would be given to those who bring in $200 million and $300 million foreign inflows in the sector, respectively.
The second recommendation is that single-brand retail firms be permitted to open online stores before setting up brick-and-mortar shops if they bring in over $200 million foreign direct investment (FDI). At present a single-brand retail player is allowed an online store only after the opening of a physical outlet.
Sources said one reason for the government pushing for the relaxation was dwindling FDI. During April-September 2018-19, FDI fell 11 per cent to $22.66 billion.
Retail traders may be allowed to adjust the incremental sourcing of goods from India for global operations during the initial 6-10 years, from the current five years, against the mandatory requirement of 30 per cent sourcing from India.