Govt to ease sourcing norms for luxe retailers

After allowing 51 per cent FDI in multi-brand retail leaving

the final decision to the states, moving further, the government is also considering relaxing mandatory 30 per cent sourcing FDI norm for foreign luxury multi-brand retailers. While the foreign supermarket chains such as Wal-Mart and Tesco may not find it difficult to meet the mandatory local sourcing clause, high-end retailers looking to sell only luxury goods may not be able to abide by the rule.

So if the government gets applications from luxury multi-brand retail stores, which cannot meet the norm, it could consider them on a case-by-case relaxation. Most multi-brand retailers are already in a better position than single-brand retailers to source their requirements partly from the domestic micro, small and medium enterprises or MSMEs as they sell a variety of low-end products but same is not the case with luxury retailers.

The Cabinet has relaxed the 30 per cent domestic sourcing requirement for single-brand retailers by allowing sourcing from Indian companies of any size. It, however, decided to retain the condition of compulsory sourcing from small companies for multi-brand retailers. The Cabinet also relaxed the ownership clause for FDI in single-brand retail that required the investor company to also own the brand. This will help fast-track pending applications of brands such as Massimo Dutti and Promod.