Global single brand retailers like Swedish furniture firm IKEA may find it tough to get easing of norms for compulsory sourcing from the Indian tiny and small units, with the Micro, Small and Medium Enterprises (MSME) ministry strongly opposing the move of the commerce and industry ministry.
“I am opposed (to it) if you will say that you will not procure 30% from India and will procure everything from abroad,” said additional secretary in the MSME ministry, Amarendra Sinha.
The government has eliminated the 51% cap on FDI for single brand retailers.
However ,those opting for taking FDI beyond 51% will have to source at least 30% of their merchandise from Indian micro and small enterprises (MSEs).
While IKEA has moved its application for raising FDI up to 100%, it has sought from the government easing of norms for compulsory procurement from MSEs. Presently, a firm with up to R5 crore investment qualifies to be an MSE.