Retail FDI: Ministry opposes easing of sourcing norms

 PTI   New Delhi     Last Updated: July 26, 2013  | 09:54 IST

The MSME Ministry on Thursday said the global multi-brand retailers must have to comply with the mandatory 30 per cent sourcing norm from small industries.

Retail giants like Walmart, Tesco and Carrefour have demanded from the government relaxation in the mandatory sourcing condition and make it to 'preferably' as in the case of single brand retail trading.

"Not preferable, it is a must. We are proposing it should be a must," Micro, Medium and Small Enterprise (MSME) Minister K H Muniyappa told reporters on the sidelines of a Ficci function.

He was replying to a question on the demand of global retailers. He also said a multi-brand retail chain must not be allowed to source from those SMEs who become large units after a few years.

The ministry has said a global retailer must not be allowed to source from SMEs, three years after the unit crosses the investment limit of $1 million.

As per current policy, multi-brand retailers must procure 30 per cent of products mandatorily from small and medium enterprises (SMEs) with an investment in plant and machinery not exceeding $1 million.

Meanwhile, Additional Secretary in the MSME Ministry Amarendra Sinha too said that the foreign retailers will have to source at least 30 per cent from SMEs.

The world's largest retailer Walmart had expressed its inability to the government on meeting the sourcing norm in the multi-brand segment, stating it can procure only about 20 per cent.

Although the government has permitted 51 per cent FDI in multi-brand retail about ten months ago, no formal proposal has been received by the DIPP yet.

Muniyappa also a launched a project Badal, which is a cloud computing platform to enable MSMEs to improve their production processes, manufacturing capabilities, quality and competitiveness.

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