Pushing ahead with major reforms, the Central Government has relaxed foreign investment rules in the country and eased the process for approval of FDI in Single brand retail trading, Wholesale (Cash and carry) trading and Indian brands manufactures. The idea of the reforms is to ease, rationalise and simplify the process of foreign investments in the country thus routing more FDI proposals on automatic route instead of Government/approval route.
Some of the highlights of the recent reforms are:
- As per existing FDI policy, in single-brand retail, locally sourced goods (the 30 per cent of total goods purchased clause) are reckoned from the date of receipt of FDI. Under the recent amendment, sourcing requirement will be reckoned from the day of opening of the first store. Furthermore, sourcing norms can be relaxed subject to Government approval.
- FDI-funded single brand retail trading (SBRT) companies have been permitted to undertake e-commerce activities.
- Indian brands are equally eligible for undertaking SBRT. Also, certain conditions of the FDI policy applicable to the sector will not be made applicable in case of FDI in Indian brands.
- Wholesale and single brand retail trading has now been permitted as the same entity.
- Manufacturers are now permitted to sell their products through wholesale and/or retail, including through e-commerce without Government approval. For the purposes of FDI Policy, Indian manufacturers be the investee company owning Indian brands manufactured in India. In terms of value, at least 70% of the products be manufactured in-house, and at most 30% sourced from Indian manufacturers. Furthermore, Indian brands should be owned and controlled by resident Indian citizens and/or companies.
Knowing how the earlier FDI regulations were hampering business of Indian retailers, RAI had submitted a few suggestions through representations to the Central Government. Most of them have been accepted in the current round of reforms. To view/download the representations. Click here.