FDI in retail: Plans to make 30% mandatory sourcing from MSEs

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SME Times News Bureau | 17 Feb, 2012
The government plans to make it obligatory for multi-brand retailers to source 30 percent of their annual purchases from micro and small enterprises (MSEs), MSME Minister Virbhadra Singh said Thursday.

"The Centre is planning to make mandatory for multi-brand retail to source 30 percent of their purchases from MSEs," he told reporters on the sidelines of a business event in Bangalore.

In January, the RBI operationalised the change in FDI policy by removing restrictions on foreign investment limit in single brand retail. The Department of Industrial Policy and Promotion (DIPP) had earlier increased the limit of foreign direct investment (FDI) in single brand retail from 51% to 100%.

Commenting on the Public Procurement Policy, the MSME minister said that the policy would be notified after March 6. "The government will notify the Public Procurement Policy after state assembly poll results."

The policy would be voluntary in nature for three years and made mandatory after that, Singh added.

The policy mandates 20 percent reservation for MSEs in all procurement by government departments and PSUs. "This will give much needed support to MSEs in marketing their products," he said noting a four percent earmarking for SCs and STs.

"PSUs are expected to buy goods worth Rs 35,000 crore from the MSEs, of which a business of Rs 7,000 crore would go to the SCs/STs," he said.

A task force chaired by the Prime Minister’s Principal Secretary, T.K.A. Nair, had proposed a compulsory procurement policy for MSMEs to help them improve their bottom lines and broadly encourage small-and-medium businesses in the country.