Single brand retail norms could be tweaked by DIPP: Sources

The Department of Industrial Policy and Promotion (DIPP) is likely to tweak foreign direct investment norms in single-brand retail, CNBC-TV18 said quoting sources.

Government last year allowed up to 100% FDI in single-brand retail, paving the way for companies like Marks & Spencers and Ikea to  to directly run stores in India. But that permission came with a rider that companies will have to have 30% domestic sourcing if FDI was above 51%.  Sources told CNBC-TV18 that foreign companies have expressed concerns on domestic sourcing and there are fears they won't come to India due to the sourcing clause.

The government had also permitted FDI in multi-brand retail, but postponed it soon after due to strong political opposiition.

Since the 100% FDI was approved in single-brand retail last year, proposal by London-based Pavers for 51% FDI is the only one received so far. Swedish furniture retail giant Ikea has communicated its concerns in writing, CNBC-TV18 said, adding, IKea's top brass will visit India to discuss the FDI issue.

However, DIPP cannot unilateraly change the domestic sourcing clause, which was proposed by Ministry of Micro, Small and Medium Enterprises.

DIPP is likely to talk to the MSME Ministry in relation to the issue, CNBC-TV18 said.

Meanwhile, the National Manufacturing Competitiveness Council is also mulling a domestic sourcing clause, sources told the broadcast station.