The Centre on Wednesday said it would not roll back the 30 per cent local sourcing condition norm for 100 per cent foreign direct investment in single-brand retail.
“Domestic sourcing norm in single-brand retail is a well considered policy decision. Sourcing from MSME (micro, small and medium enterprises) from within the country is a matter of experience which will tell us that sourcing will be rewarding for investors and the small enterprises,” the Commerce, Industry and Textiles Minister, Mr Anand Sharma, told reporters here.
Mr Sharma's statement comes a day after a statement from his Ministry on his meeting on Monday with the Chief Executive Officer of the IKEA Group, Mr Mikael Ohlsson, in Paris, on the issue.
Recently, some multinational companies had expressed concern about the local sourcing clause. Their concerns included the ‘lack of adequate capabilities' of domestic small enterprises in being suppliers with respect to quality and capacity.
Business Line had earlier reported that the Government would not go back on this clause.
Mr Ohlsson said that India was an important market and his company would like to be involved in strengthening SMEs here, according to a Commerce and Industry Ministry statement.
Mr Ohlsson had shared his views with Mr Sharma on the local sourcing clause, saying that he will soon travel to India to meet officials and stakeholders concerned, according to the statement.
On January 10, the Centre had notified 100 per cent FDI in single-brand retail trade under the Government approval route, up from the extant ceiling of 51 per cent.
However, the Press Note had a rider saying, “In respect of proposals involving FDI beyond 51 per cent, mandatory sourcing of at least 30 per cent of the value of products sold would have to be done from Indian ‘small industries/village and cottage industries, artisans and craftsmen'.”
Small industry is defined as those with total investment in plant and machinery not exceeding $1 million.