The government may also permit single-brand retail firms to open online stores before setting up physical shops.

Government planning to ease local sourcing norms for FDI in single brand retail
Atom Retail Tuesday, August 27, 2019 - 09:07

In a bid to keep its promise of bettering the ease of doing business in the country, the central government is likely to make more announcements benefitting foreign firms involved in single brand retail.

In her budget speech last month, the Finance Minister had indicated that the government was looking at easing of norms for the single brand retail firms with FDI. In line with that announcement, it is now rumoured that the government may declare some concessions in the local sourcing norms, which stands at 30% now. There is even a proposal to permit the single brand retail foreign firms to open their ecommerce sites before they have offline retail stores. This will mean a reversal of the current policy that insists on the companies first opening their brick and mortar outlets before going online.

The government’s policy on FDI in single brand retail has undergone many changes ever since it was brought in. The first time the then UPA government opened up the sector allowing foreign single brand retailers to setup shop here with an investment cap of 51%. This was relaxed to 100%, provided 49% investment would be allowed in the automatic route while for the remaining 51% the foreign company will have to obtain the approval of the Foreign Invest Promotion Board or FIPB. This government has further relaxed it to allow 100% FDI in single brand retail, in 2018.

Now, the segment may receive further relaxations in the various norms that bind them to this investment approval.

These series of measures to boost FDI in single brand retail may be announced soon it is learnt. There are norms where the companies can source products from India for export and off-set them against the local sourcing norms. This could be relaxed as well.

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