Retailers meet Sharma; seeks changes in FDI norms

In a meeting with the Union Minister for Commerce and Industry, Anand Sharma, the representatives of both foreign and domestic retail companies Thursday urged the minister to tweak foreign direct investment (FDI) norms in multi-brand segment, reports media.

"Sourcing rules must be made similar to that of single brand while demanding foreign firms be allowed to put only 50 percent of first tranche of investment in back-end infrastructure," said retailers, during the much-hyped retail round-table called by the minister.

Representatives of retail companies, including Walmart, Tesco, Carrefour, Bharti, Aditya Birla Group, Tatas, Reliance and Pantaloon, among others met Sharma in New Delhi on Thursday.

Sharma in his reply said that his government has sufficient space to address those concerns.

He said, "The purpose of this meeting has been to interact with the multi brand retailers, potential investors, some of them have established presence in India, in the back end or setting up sourcing establishments. it is ongoing dialogue between the government, the businesses and the investors."

"Some questions have been frequently raised, there has been speculation, and also misgivings. It was important for the government to hear where are the areas or the issues which may require some more clarity."

"The objective of the policy is to encourage investments, job creation, benefit to the farmers and benefit to the consumers. Therefore we have sufficient space to address those concerns, bring in the clarity, and an early and appropriate view will be taken so that the guidelines can accordingly be given out," Sharma added.

According to media report, the industry raised two-three major points like the issue of 30 percent sourcing from small and medium enterprises (SMEs).

As per current FDI policy in the retail sector, 30 percent of products sold by single brand retailers, where 100 percent FDI is allowed, are to be "preferably" sourced .

On the other hand, in multi-brand segment, where only 51 percent FDI is allowed, it is "mandatory" for the company to procure 30 percent from SMEs.

The issue of investment in the back-end infrastructure. Also as per existing rules, foreign retailers in multi-brand segment will have to make a minimum investment of 100 million in India, of which 50 per cent must be in the back end chain.

A recent clarification by the DIPP has stated that the investment in the back-end infrastructure will have to be specifically for the new chain of stores that the foreign retailer would set up in India, report added.