INDIA: India keeps sourcing clause in single-brand FDI
By Petah Marian | 11 April 2012
The Indian government has retained a controversial 30% local sourcing clause for single-brand retailers as part of its Foreign Direct Investment (FDI) policy, despite speculation that it would change it.
The policy, released yesterday (10 April), retained the clause that requires any company investing more than 51% in a single-brand retailer to source 30% of the value of its products from small and medium-scale Indian enterprises. However, it will allow 100% foreign direct ownership in single-brand stores.
According to a report in The Hindu, Abhay Gupta, CEO of consultancy Luxury Connect said: "Companies like Ikea and Nike have raised concern on the sourcing clause. Every brand would like to go alone but this is a major bottleneck as it is difficult to find expertise among small vendors. Also companies will have to go to more suppliers so that they are less than $1m. This will create supply chain inconsistencies."
Sectors: Retail
Companies: Nike
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