MNC retailers may get to enter smaller cities too

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NEW DELHI: The government may allow foreign multi-brand retailers to set up stores in cities with a population of less than a million, a measure that is part of the possible relaxation of norms that the department of industrial policy and promotion (DIPP) is examining.

A senior official said the commerce and industry ministry might approach the Cabinet with a number of changes in the foreign direct investment norms, including on allowing the foreign chains to continue sourcing from the small enterprises even after they become large.

“They (foreign supermarkets) want to open stores in cities with population less than a million. They are saying this is important to spread network and to make their business viable. We may have to approach the Cabinet on a few things,” said the official, who did not wish to be named.

Foreign retailers are allowed to open front-end stores in cities with population over one million, except in hilly states such as J&K and Assam. Commerce and industry minister Anand Sharma last week held a meeting to hear the concerns of the foreign retailers.

Chains such as Walmart and Tesco said the 30% mandatory sourcing from small enterprises be made ‘preferred’, just as in the case of single-brand retail, a request that an official said was being considered.

Several suggestions have been put forward on the 30% sourcing from the MSMEs (micro, small and medium enterprises), the official said. The government is also looking at another suggestion on allowing foreign firms to put only 50% of the first tranche of $100 million investment in back-end infrastructure.

Source- Economic Times

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