Mumbai: Industry experts as well as the largest trade body of retailers RAI have hailed the new foreign investment norms for single-brand retail wherein government on Wednesday allowed automatic approvals for 100 per cent foreign capital, as a positive step.
So far, only 49 per cent FDI was allowed under automatic route in singe-brand retail. Investment beyond that level required government approval. Furthermore, local sourcing norms have also been relaxed for a five years. "We believe the decision to allow 100 per cent FDI through automatic route will ease the process for foreign as well domestic brands," Kumar Rajagopalan of the industry body Retailers Association of India (RAI) said in a statement.
As global companies take time to develop good suppliers as partners, the relaxed time frame for sourcing is seen as "conducive" without compromising on the need to be a good sourcing hub for global brands, he added. Retailers will be able to start operations and will have five years to find local partners and vendors that qualify in terms of quality and price.
As per industry estimates, the domestic retail sector is pegged at Rs 1 trillion by 2020 at an estimated compounded annual growth rate of 15 per cent. Aashish Kasad of EY India described the decision as a progressive step that will help attract foreign investment into the sector.