Relaxation in Single Brand FDI Rules

The Government of India is considering easing the rule for local sourcing of material for FDI in single brand retail.

This implies that foreign brands expanding business in India through the Automatic FDI route may be allowed relaxation from the current mandatory 30% local sourcing norm. Depending on the amount of investment, the foreign retailer can get up to 10 years over which it can scale up sourcing to the desired level. During this period, the investor will be allowed to set off incremental sourcing from India for its global operations against the 30% requirement for the local outlets. The Proposal also seeks to allow single brand retails forms to open on-line stores before setting up brick-and-mortar shops in India if they invest above USD 200 M.

With this change on the anvil, the time may be ripe for foreign brands to invest in the ever growing Indian market.