By  on July 8, 2019

NEW DELHI, India — As India’s new budget sets the ambitious goal of almost doubling the economy’s size over the next five years, to $5 trillion, retailers cheered a more modest proposal: an easing in the requirements for single-brand retailers to source a large percentage of their merchandise from local manufacturers.

There are few specifics at this stage in the new budget presented Friday by Indian finance minister Nirmala Sitharaman, who simply said that “local sourcing norms will be eased for foreign direct investment (FDI) in the single-brand retail sector.” The rules were a major barrier to entry into India’s fast-growing, $700 billion retail market. They had required brands to source at least 30 percent of their merchandise from within India, and had taken effect when 100 percent FDI in single-brand retail was allowed in September 2012. Last year the government increased the window for such sourcing, stating that a foreign retailer would be able to get credit from any incremental increase in sourcing beyond the 30 percent. Global retailers had been fighting that clause.

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