MNC retailers must source 30% from local MSEs, says Govt

“I felt it my duty to dispel some apprehensions expressed by certain political parties. In formulating this policy, we were conscious of the livelihood concerns of millions of small retailers,” Sharma said in a letter addressed to political parties opposed to FDI in retail.

India decided to allow 51 percent foreign direct investment in multi-brand retail and 100 percent in single-brand retail on November 24. Cornered over the issue of sourcing from micro and small enterprises (MSEs) under the new FDI policy in retail, Sharma has also dispelled doubts saying the 30 per cent obligation before the global players is limited to India.

This is a clarification to the official note issued last week, when the government allowed 100 per cent FDI in single-brand retail and 51 per cent in multi-brand, which stated that the 30 per cent sourcing by global retailers "can be done from anywhere in the world and is not India specific".

"No, no that was misconstrued (in the Cabinet)," Sharma told reporters here, adding 30 per cent of the sourcing has been made mandatory from Indian MSEs. He said this provision of procuring from Indian small units will not violate the WTO obligations.

"We have taken a decision, we did it for solar mission and telecom sector and we have deliberated upon it, it is important...it will create jobs, give a fillip to manufacturing of micro and small industry," he said.

Small enterprises had raised concerns over the clause of 30 per cent sourcing from MSEs anywhere in the world saying this may help Chinese rather than Indians in view of cheaper labour in the neighbouring country.

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