MSME ministry against tweaking of retail sourcing norms

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Namrata Kath Hazarika | 08 Aug, 2012
Maintaining its earlier stance, the Ministry of MSME on Tuesday reiterated the view that they are against tweaking of retail sourcing norms for global retailers like Swedish firm IKEA, which had recently decided to invest Euro 1.5 billion in India but objected on sourcing over 30 percent from India small and medium enterprises.

"I oppose to it if you say that you will not procure 30 percent from India and you will procure only from abroad," said MSME ministry Additional Secretary, Amarendra Sinha.

"IKEA is already procuring from China and Brazil at the moment. So, why not from India?" he questioned.

As per the single brand FDI policy, global retailers would have to source 30 per cent of their requirement from Indian small firms, which have a total investment in plant and machinery not exceeding $1 million.

Recently, a senior Department of Industrial Policy & Promotion (DIPP) official had told media that may consider tweaking of sourcing norms for global retailers to set up shop in India in the wake of IKEA seeking further relaxation of mandatory conditions.

DIPP, which operates under the Ministry of Commerce and Industry, is responsible for formulation and implementation of promotional and developmental measures for growth of the industrial sector.

While individual administrative ministries look after the production, distribution, development and planning aspects of specific industries allocated to them, DIPP is responsible for the overall Industrial Policy.

On June 22, IKEA had proposed to DIPP a 100 per cent controlled single-brand retail business in India. The company revealed its plans to invest a lump sum amount over 15 to 20 years to set up 25 stores in the country.

IKEA wants that India should relax norms as they are not able to comply with the sourcing conditions implemented in the single-brand retail policy. It had asked the government to give a time period of 10 years to fulfill the mandatory condition of sourcing.

Singha added that DIPP is supposed to consult the MSME ministry on this issue. "Let DIPP consult us then we will tell our observations," he added.