No dilution of FDI norms in single brand retail: MSME minister

Micro, Small and Medium Enterprises (MSME) Minister Vayalar Ravi, confirmed that it has not received any proposal for relaxing the Foreign Direct Investment (FDI) norms in single brand retail. The Ministry also pointed out that FDI guidelines in single brand retail were approved by the cabinet with inputs from all concerned ministries.

Though, the ministry also noted foreign retailers who are interested to set up 100% single brand retail stores in India, have raised concerns over the mandatory condition of 30% sourcing from Indian SMEs. Swedish furniture giant IKEA is of the view that once big time orders are placed on domestic entities, they will have to expand capacity and get in more investment and thus would not remain the MSEs eligible for sourcing by global firms. Currently, a company up to investment of Rs 5 crore qualifies to be called MSE.

The furniture retailer, who has moved application for raising FDI up to 100%, has asked for easing of norms from the government for required procurement from the MSEs. It also plans to invest Rs 10,500 crore to set up about 25 stores in India.

However, earlier this month, Commerce and Industry Minister Anand Sharma had assured revision of MSME‘s definition to help foreign retailers.