Looking towards establishing retail stores chain, the Chinese smartphone giant Xiaomi has sought complete exemption from the local sourcing norms. Currently, the mandatory local sourcing norms to open single brand retails stores in India is 30 percent.
“The company has sought permission from the Department of Industrial Policy and Promotion (DIPP)for opening single-brand retail trading (SBRT) in India. They also want exemption from the mandatory local sourcing norms,” sources said.
Xiaomi when contacted about the matter, said: “We have filed an application for SBRT but would be unable to share more details as it is still at a nascent stage.”
Only last year, the government has provided relaxation in the foreign direct investment (FDI) policy for single-brand retailing. The policy states that the government has the right to relax the sourcing norms for establishment
As per the policy, the government may relax the sourcing norms for entities having ‘state-of-the-art’ and ‘cutting edge’ technology venturing towards single-brand retailing of products and where local sourcing is not possible.
Presently, companies are permitted to have 100 percent FDI in the sector but it is necessary for the companies whose limit are exceeding 49 percent to take FIPB permission.
Also, when the proposals involving FDI is beyond 51 percent, then it is mandatory to source and purchased 30 percent of the value of goods from India, preferably from artisans and craftsmen, village and cottage industries, MSMEs, in all sectors.
Xiaomi’s devices are sold through retail stores and select e-commerce platforms globally of which India is one of the biggest markets. According to IDC research firm, the shipment grew 28.8 percent in India to 103.6 million units in 2015 as compared to 10.1 percent growth in the global market.