FDI in retail: Increase mandatory sourcing norm to 50%
New Delhi: Days after the government relaxed FDI norms in the retail sector, the country's apex apparel body AEPC on Tuesday said foreign retailers must be made to source up to 50 percent from MSMEs to protect domestic manufacturers.
Apparel Export Promotion Council (AEPC) President A Sakthivel said he will write to the Commerce and Industry Minister Anand Sharma regarding the issue.
"If we don't put mandatory sourcing conditions then the foreign retailers will buy garment and apparels from Bangladesh and sell in their stores here as India allows duty free imports of textile products from that country. It will severely impact domestic industry and manufacturers," Sakthivel said.
Last Friday, the government relaxed the 30 percent mandatory sourcing condition for foreign players in single brand retail. However, for multi-brand retail, global retailers will have to source 30 percent from micro, small and medium enterprises (MSMEs).
"We will ask the government to increase this 30 percent to 50 percent. It will help domestic industry and boost local manufacturing," he said.
The government has received six proposals from global single-brand retailers seeking permission to own 51 percent of their operations in India.
Global players who have applied to the government include apparel maker Tommy Hilfiger, clothing retailer Brooks Brother Group, Italian jewellery brand Damiani International, French fashion brand Promod SAS, Fapa Company Ltd and NA Pali Europe SARL, which is a unit of sportwear retailer Quiksilver.
Many of these firms are already present in the country through licensing and joint-venture partnerships with local retailers.