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FDI gathers momentum in India

Government eases local sourcing rules surrounding single-brand retail space

FDI gathers momentum in India

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The Indian government’s move to liberalise foreign direct investment (FDI) in the country’s retail segment continues to gather momentum, following the relaxation of rules governing local sourcing of products.

According to a report from the Economic Times, overseas-based single-brand retailers can now bypass the 30 per cent local sourcing requirement during their first five years of operating in India. Companies will have to meet the 30 per cent sourcing norm after this period.

The move has been welcomed by clothing giant Uniqlo and tech company Xiaomi who have recently applied to start single-brand businesses in India. Furniture specialist Ikea, which plans to open stores in India later this year, has also been calling for the relaxation of the ruling.

In a further sign of support for FDI, international airlines will now be able to own up to 49 per cent of Air India, subject to conditions. Foreign airlines were previously allowed to acquire a 49 per cent stake in all Indian carriers excluding Air India. 

The announcement comes ahead of Indian Prime Minister Narendra Modi's trip to the World Economic Forum in Davos, where the Economic Times said he plans to showcase the country's investment potential. 

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