FDI in single brand retail: Govt to allow online sales before opening up physical outlet

The Indian government may soon ease mandatory local sourcing norms for FDI in single-brand retail trading.

According to sources close to the govt, among many things, govt is mulling over allowing online sales by single-brand retail before setting up physical shops. At present, the single-brand firm can not sale online before opening a brick and mortar store.

Govt will bring a few amendments and will further ease the provision. For a single retail brand, mandatory 30 per cent local sourcing and incremental sourcing clause might be tweaked in favour of global firms.

The development comes after an announcement made by Union Finance Minister Nirmala Sitharaman in union budget last month. In July, she said that local sourcing norms would be eased for FDI in single-brand retail.

Commerce and Industry Minister Piyush Goyal had also emphasised on improving local sourcing norms.

"India has opened up opportunities for single-brand retail and is easing some detrimental clauses of the policy in next few weeks which will help single-brand retail come in a bigger way to the country," Goyal had said while addressing CEOs of multinational companies.

At present, 100 per cent FDI is permitted in the sector with certain conditions, including 30 per cent mandatory local sourcing from MSMEs and small traders.

Last years, FDI inflow went down by 11%.

As per experts observing the space, the govt is looking to push the sector as the move will attract more brands to India. Several global brands have been facing a roadblock in the form of local procurement conditions to set up stores in India.