Indian Government Has Issued Clarification on The 30 Percent Souring From SMEs

In response to queries by prospective investors on Indian Government’s foreign direct investment (FDI) in multi-brand retailing, the Ministry of Commerce has issued clarification on the 30 percent souring from small and medium enterprises (SMEs).
 
In a statement, the Ministry said a foreign investor who purchases 30 percent of its total procurement through goods processed or manufactured by the SMEs, cannot distribute those goods either through the retail operation and/ or cash & carry operations and/ or export for the foreign investor’s international retail & trading operations.
 
The statement said, “The 30 percent sourcing will be reckoned only with reference to the front end store. As such a multi-brand retailing entity cannot engage in any other form of distribution.”
 
Giving a clarification on the definition of ‘small industries’, as used in the FDI Policy, the statement said the term refers to industries with maximum investment of US$ 1 million in plant and machinery.
 
On questions regarding identification of ‘small industries’, the statement said, “Certificate issued by District Industries Centre would be adequate authentication to confirm status of supplier as small industry.”
 
It further states that procurement of fresh produce is not covered by the 30 percent sourcing condition.