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Cabinet eases sourcing norms for multi-brand retailers

02 Aug 2013 Evaluate

Bowing to the demands of the foreign retailers and surrounded by the tough investment environment, the Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Manmohan Singh diluted the mandatory 30 percent local sourcing norms for multi-brand retailers and permitted states to include cities with population less than 1 million for allowing multi-brand retailing. Though, it was reported that the move to dilute these conditions met with strong resistance from the Ministry of Micro, Small and Medium Enterprises (MSME), but the CCEA overlooked them in order to attract much needed FDI investments in multibrand retail trade (MBRT). The MSME Ministry was of the opinion that a three-year period from the day a MSME outgrows the investment limit of $2 million would provide the required space to equip itself independently to supply to the retailer without being covered under the 30 per cent procurement.

Commenting on the decision Commerce and Industry Minister Anand Sharma said the relaxation in multi-brand retail norms will give 'more clarity and more space to investors'.

As per the latest approval the 30 percent mandatory sourcing from small scale industries clause has been waived off. Under the new policy, medium scale industries with total investment not exceeding $2 million would also be made eligible for sourcing of manufactured/processed to products. It was also approved to increase the number of cities to be covered under the MBRT policy by amending the clause of permitting cities or States with less than 10 lakh population to open front end stores with the permission of the States or Union Territories.

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