What is allowed?
100% FDI is allowed in single brand retail.
What are the restrictions?
Companies that own more than 51% ownership must source 30% good from India and even in this the medium, small and micro industries should be the ones that are preferred.
What are the changed norms now?
- Changing the sourcing norms, the government has now exempted those companies which sell “products having ‘state-of-the-art’ and ‘cutting-edge’ technology” from the sourcing conditions.
- It also exempted those companies “where local sourcing is not possible”.
What’s wrong with these changed norms?
- These norms have increased the ambiguity even more as there are no proper standards which would decide if the product is state of the art or if local sourcing is possible or not.
- The entire decision to grant such exemptions will be in the hands of commerce ministry. This opens to door to arbitrary grants, lack of transparency and favouritism.
- It is a fact that the sourcing norm has inhibited FDI inflow into India. Should government drop the sourcing condition altogether? Also analyse the status of retail FDI in India. (200 Words)