IKEA gets its way, govt eases rules

The government has eased some of the restrictive conditions for single-brand retail trading including dropping the mandatory 30% sourcing of goods from small enterprises. HT reports.

The government has eased some of the restrictive conditions for single-brand retail trading including dropping the mandatory 30% sourcing of goods from small enterprises.

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These are on the lines sought by Swedish furniture and home accessories major IKEA, which wanted the government to tweak a clause that required it to source 30% of the value of goods sold in India from small industries whose investment do not exceed Rs. 5.5 crore.

In the revised notification issued on Thursday, the government has changed this clause from mandatory to optional, and has asked retailers to source 30% of their merchandise from India, “preferably” from Indian small enterprises. It also dropped the $1-million (Rs. 5.5-crore) investment upper limit in defining small enterprises.

IKEA argued that its suppliers were bound to grow due to their association with it, and wanted these firms to continue to qualify as small industries even if their investments exceed Rs. 5.5 crore.