The govt may consider a proposal of relaxing 30% local sourcing norms by foreign single-brand retailers.
The Union Cabinet may soon consider relaxing foreign direct investment (FDI) norms in single-brand retail trading and digital media, in line with the announcements made by finance minister Nirmala Sitharaman in her budget speech.
As per a comprehensive plan to attract foreign investment, the Cabinet may also consider easier FDI norms for coal and contract manufacturing. The Department for Promotion of Industry and Internal Trade (DPIIT) has begun work on a proposal to relax FDI rules for a plethora of sectors including media, aviation, insurance, contract manufacturing and single-brand retail.
This comes in the wake of FDI equity inflows declining for the first time in six years in 2018-19, down 1% to $44.4 billion from $44.8 billion in the previous fiscal.
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The government is likely to ease the annual procurement requirement for FDI in single-brand retail while retaining the 30% sourcing norm. This procurement requirement, viewed as a deterrent by investors, has to be met, in the first instance, as an average of five years’ total value of the goods purchased, beginning April 1 of the year of opening of the first store. Thereafter, it needs to be met on an annual basis.
Source: Economic Times
