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colinjerseys Think Levi’s, Starbucks or Ikea, while a multi brand retail store is like a typical Big Bazaar which sweeps many brands under one roof.Currently, the FDI policy allows 100 percent foreign investment in single brand retail under the automatic route but requiresan investor to source 30 percent preferably from MSMEs, village and cottage industries, artisans and craftsmen.This sourcing requirement has to be met, in the first instance, as an average of five years’ total value of the goods purchased, starting April 1 of the year of opening of the first store.While there was a recent relaxation provided to offset the sourcing from India for global operations against the local sourcing, the same did not have the expected impact to boost FDI in the sector.Paresh Parekh, Partner and National Tax Leader, Consumer Products and Retail, EY India, said, “There was a lot of reluctance by the existing foreign JV players in the sector to increase FDI beyond 51 percent to avoid coping with the sourcing norms and also reluctance shown by new foreign brands to enter the sector owing to the sourcing norms.”Welcoming More PlayersRetail experts said this move will not only open gates for more brands to enter India but also be positive for the existing players.”Budget proposal to relax the local sourcing conditions in the sector should have a big positive impact for the existing players and also to the sector owing to the new FDI which should now enter the sector,” Parekh added.Echoing Parekh’s view Anil Talreja, Partner, Deloitte Indiasaid while it would the impact will largely depend on the exact details of the relaxation of sourcing the announcement has clearly laid out the carpet once again for the global single brand retail companies in India.”Many of these companies were sitting on the border in a dilemma to invest or not in the Indian market on account of the difficulty in meeting these sourcing conditions. These companies will certainly have to relook at their strategy to tap the large Indian consumption potential. It would now be a race for all these retail companies to evaluate the conditions and take a quick decision to invest in India.”Cupertino headquartered company Apple Inc was planning to open up its branded Apple Stores in India.

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