Local sourcing rules on single brand retail FDI to be eased: Goyal

New Delhi: India will be easing mandatory local sourcing norms for FDI in single brand retail trading in the next few weeks, Commerce and Industry Minister Piyush Goyal said. "India has opened up opportunities for single brand retail and is easing some detrimental clauses of the policy in next few weeks which will help single brand retail come in a bigger way to the country," an official statement said quoting the minister.

He was addressing CEOs of multi-national companies in the UK-India Joint Economic and Trade Committee (JETCO) meeting held on Monday in London. The government in Budget proposed that local sourcing norms will be eased for FDI (foreign direct investment) in single brand retail sector.

Currently 100 per cent FDI is permitted in the sector with certain conditions, including 30 per cent mandatory local sourcing preferably from MSMEs. The minister also requested companies around the world to respect Indian sensitivities on restrictions of foreign investment in multi-brand retail.

"Particularly, e-commerce companies coming to India will have to ensure that they stay within the letter and spirit of the law when it comes to multi-brand retail and India's policies around that," he said. He also said that manufacturing in India, in a cost-competitive environment, could be the key for British companies to expand their footprints to other parts of the world.

"Designed in the UK-Made in India can be the new focus area for this partnership. Similarly, in the services sector, India can provide huge technical expertise to British companies," the minister said. Further he said if the spirit of research and innovation in British industry and academia is bound together with the strength of the skilled Indian work force, the two countries may become the preferred supplier for the rest of the world.

Both countries have agreed to set up three new bilateral working groups to tackle barriers in specific sectors including food and drink, healthcare and data services. India-UK trade and economic relations are reviewed annually by JETCO at the level of Commerce and Industry Minister. Till date, 12 meetings have taken place and the last was held in January 2018 in London.

Goyal assured that India's foreign direct investment (FDI) norms in the multi-brand retail sector are a very well thought out policy which are unlikely to change any time soon. Speaking on the sidelines of an India Day event organised by the UK's Department for International Trade (DIT), the minister said the 49 per cent FDI threshold in multi-brand retail must be respected in letter and spirit by all foreign brands.

Britain's prime ministerial frontrunner Boris Johnson had recently expressed his disappointment at UK retailers like Sainsbury's and Waitrose not being able to set up base in India and had said he would like to see India opening up to more of our great brands . "On multi-brand retail we are very clear as of now it's a 49 per cent restriction for foreign investment," Goyal said, when Johnson's recent intervention was put to him.

"It's a very well thought out policy, recognising that the strength of Indian small retailers to serve the people of India across the length and breadth of the country is very deeply rooted in the culture of the villages of India. So, for the present, we would not like to change that," he said.

"I think companies which want to come into India will have to look at restricting the foreign ownership to 49 per cent if they are looking multi-brand retail. And we would like them to ensure that in letter and in spirit," Goyal said. The minister, however, highlighted the significant concessions and liberalisation planned for the single-brand retail sector so that more international companies can set up stores in India and expand their business.

"They can also meet their requirements of 30 per cent domestic sourcing through their export requirements and integrate their global chains so that it's a win-win both for India and the single brand retailer coming into the country, he said.

With reference to the key outcomes of JETCO, the minister said that he has observed an enthusiastic approach within the UK government to make the best out of the opportunity that will come out of Brexit. "While we recognise that till Brexit happens, the UK is constrained to be able to finalise things or to move forward with any bilateral arrangement with any country," he said.

If we can continue this comprehensive dialogue, where the larger gamut of issues are on the table now for the next 12-15 months, we will be well poised before Brexit to be able to make some significant announcements soon after Brexit and to be able to expand this relationship and take it to significantly larger levels.

Goyal, who is also minister of railways, addressed the India Day event organised to showcase bilateral investment prospects to highlight the potential India and the UK have to offer an "unbeatable cost competitive" partnership. Asked about some of the missed opportunities in the bilateral ties recently flagged by a UK parliamentary panel, the minister said that he believes that Brexit would result in addressing some of those gaps.