Government will give exemption to foreign players like Apple Inc, coming with 'state of the art' technology, from the mandatory local sourcing norms in the single brand retail sector for up to three years.
Secretary in the Department of Industrial Policy and Promotion (DIPP) Ramesh Abhishek said that after the exemption period, they will be given five years to comply with mandatory 30 per cent domestic sourcing.
The measure, he said, is aimed at creating more jobs and promoting growth of MSMEs.
"For us, local sourcing is an important issue because we need to create jobs. Interest of MSMEs is very important. Companies whose products will be certified as 'state of the art', will get exemption for up to three years," Abhishek told PTI.
After completion of the exemption period, the foreign company in the next five years will have to meet the domestic sourcing norm at an annualised average rate of 30 per cent. Thereafter, they have to comply with the norm on an annual basis.
The decision assumes significance as the US-based Apple Inc had sought complete exemption from the sourcing provisions. But the finance ministry has rejected that. Now they would have to apply afresh to avail the benefits of the changed policy.
On the issue of defining the term "cutting edge", he said that the department is in talks with the Finance Ministry on this.
When asked about the changes in the FDI policy for the food processing sector, he said there are "no conditions" for foreign investors in this.
"This decision would benefit farmers. A foreign investor would anyway invest in front-end and back-end, so there was no need to put any conditions for them," he said.
On the defence sector, he said removal of the "state of the art" norms would provide greater clarity to investors and the country would be able to get more FDI in the sector.
Further, the secretary added that yesterday's decisions to relax FDI norms in about eight sectors, including civil aviation and private security agencies, would help in attracting more foreign inflows.
Abhishek added that press note on all the eight sectors would be released soon by the DIPP.
"In the last two years, we have liberalised the FDI regime and has attracted huge investments. It has helped in boosting investors confidence also and with the new changes, we expect to increase more FDI," he said.
In 2015-16, FDI in the country grew by about 30 per cent to USD 40 billion.
