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Cabinet to soon consider relaxing 30% local sourcing norm for FDI in single-brand retail
Feb-14-2019

With a view to attract a larger number of global players in the single-brand retail sector, the Cabinet is expected to soon consider a proposal of a relaxation in mandatory 30% local sourcing norm for foreign direct investment (FDI) in single-brand retail by allowing them more time to comply with regulations. The commerce and industry ministry has already circulated a draft cabinet note seeking views of different ministries including the department of economic affairs on the proposal. After receiving the comments, the ministry will soon approach the cabinet for its consideration.

As per the proposal, single-brand retail firms may be allowed to open online stores before setting up brick-and-mortar shops if they invest more than $200 million FDI. But such firms would have to set up brick-and-mortar shops within two years of starting online sales. Presently, online sale by a single-brand retail player is allowed only after opening of physical outlet. Retail traders may also be allowed to adjust the incremental sourcing of goods from India for global operations during the initial 6-10 years, from the current five years (beginning April 1 of the year of the opening of first store), against the mandatory sourcing requirement of 30 percent of purchases from India.

These relaxations too will be subject to quantum of FDI one brings in India. Under the proposal, retailers that invest up to $100 million in the sector will get six years’ time to meet the norm. Those who bring in $200 million foreign inflows in the sector will get eight years, while those putting in over $300 million will have 10 years’ time.


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