- Norms allow firms to open online shops before setting up a physical store
- Swedish furniture retailer IKEA welcomed the move
India on Wednesday relaxed local sourcing norms for single-brand retailers with foreign direct investment (FDI) and allowed them to sell online even before setting up physical stores, in a move expected to benefit some of the world’s largest retailers including IKEA, H&M and Uniqlo.
Currently, for single-brand retailers with over 51% FDI, the policy requires that 30% of value of goods has to be procured from India as part of the local sourcing requirement. This can be met as an average during the first five years, and thereafter annually towards its Indian operations. On Wednesday, the cabinet decided that all procurements made from India by a single-brand retailer for that brand shall be counted towards local sourcing, irrespective of whether the goods procured are sold in India or exported.
Further, the government has decided that sourcing of goods from India for global operations can be done directly by the entity undertaking single-brand retail or its group companies (resident or non-resident), or indirectly by them through a third party.
Source: Livemint
