Single-brand retail policy on local sourcing may be changed

High-tech companies such as Apple Inc may be given more time by the government to comply with the domestic sourcing norms for opening single-brand retail stores in the country. The government doesn’t want to dilute the 30 per cent local sourcing norm but doesn’t mind giving more time to firm interested in opening single-brand retail outlet.

The local sourcing norm has become a bone of contention between both the ministries as the Commerce and Industry ministry has recommended exemptions to Apple from this rule. The Finance ministry has rejected it totally. Interestingly, Apple has been exempted from the mandatory sourcing norms by a Department of Industrial Policy and Promotion (DIPP) secretary-headed panel.

Presently, 100 per cent FDI is permitted in single-brand retail sector but companies are required to take FIPB permission if the limit exceeds 49 per cent. In case foreign investment is more than 51 per cent, then sourcing of 30 per cent of the value of goods purchased will be done from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors. As per the FDI policy, the sourcing requirement would have to be met in the first instance as an average of five years’ total value of the goods purchased beginning April 1of the year of the commencement of the business i.e opening of the first store. Thereafter, it would have to be met on an annual basis.