The government has eases norms for single-brand retail by allowing goods procured from SEZs to qualify for meeting local sourcing norms. The move is expected to benefit some of the world’s largest retailers, including Ikea, H&M and Uniqlo.
The goods procured from units in special economic zones (SEZs) by single-brand retailers, owned by foreign companies, would qualify for the mandatory 30 per cent local sourcing conditions, according to a government clarification.
“As regards sourcing of goods from units located in SEZs in India, it may be clarified that sourcing of goods from such units would qualify as sourcing from India for the purpose of 30 per cent mandatory sourcing from India for proposals involving FDI beyond 51 per cent, subject to SEZ Act, 2005,” according to the clarification.
However, it said that the goods proposed to be sourced by a single-brand retailer from SEZ units will have to be manufactured in India.
It added that compliance with all the conditions enumerated in the FDI policy and notified under Fema (Foreign Exchange Management Act) would continue to be the responsibility of the manufacturing entity.
Under current foreign direct investment (FDI) policy on single-brand retail trading, 100 per cent overseas investments are allowed in the sector. But sourcing of 30 per cent of the value of goods procured is mandatory from India for such companies having FDI beyond 51 per cent.