The department of industrial policy and promotion (DIPP) is looking at tweaking the foreign direct investment (FDI) policy for single-brand retail to give two-three years’ leeway to foreign firms to meet local sourcing norms, a senior official said on Friday.
The move follows the Foreign Investment Promotion Board’s (FIPB) decision in May not to waive a mandatory 30% local sourcing clause while clearing tech giant Apple’s proposal to set up own stores in India.
While the sourcing clause may not be relaxed, the FIPB is understood to have written a letter to DIPP to examine the option of giving reasonable time to foreign single-brand firms to test the market and set up requisite infrastructure to meet the sourcing norms. A panel headed by DIPP secretary Ramesh Abhishek had recommended that local sourcing norms be waived for Apple on the ground that it uses “cutting edge” technology. This idea did not find favour in the finance ministry, which is keen that access to India’s huge market should also lead to job creation in local manufacturing. Many other firms looking at tapping the single-brand retail opportunity in India are however worried about how the government would define “cutting-edge technology.”
If Apple is not getting a waiver under this norm, wouldn’t that set a benchmark difficult for most others to meet, industry sources ask.
FIPB, sources said, has asked DIPP to define cutting-edge technology to reduce the element of discretion in this regard.
Apple is looking at the huge potential in India to reverse its slowing global sales. Recently, Chinese smartphone maker Xiaomi, which had also sought an exemption from the mandatory sourcing norms to set up its own retail outlets here, said it would meet the norms.
Foreign retailers are mandated to obtain the approval of the FIPB if the foreign direct investment limit exceeds 49%. Separately, FIPB on Friday approved four FDI proposals worth R710 crore including that of Corona Remedies, Ordain Health Care Global and Macmillan Publishers lnternational.