Spl Panel to Take Up Xiaomi’s Case First for Do­mes­tic Sourc­ing Re­lief

It will de­fine ‘cut­ting edge tech’ among sin­gle-brand for­eign re­tail­ers for re­lax­ing norm

The Economic Times - - Economy: Macro, Micro & More - Ruchika.Chi­tra­van­shi @times­group.com

New Delhi: A spe­cial panel set up by the govern­ment will soon take a call on whether Chi­nese smart­phone maker Xiaomi’s pro­posal meets the “cut­ting edge tech­nol­ogy” con­di­tion for it to be al­lowed to set up stores in In­dia with­out manda­tory do­mes­tic sourc­ing.

As per the re­vised for­eign di­rect in­vest­ment norms an­nounced by In­dia last year, com­pa­nies which bring cut­ting edge and state-ofthe-art tech­nol­ogy to the country can open sin­gle-brand out­lets with­out 30% com­pul­sory sourc­ing of ma­te­ri­als lo­cally sub­ject to govern­ment ap­proval.

In its ap­pli­ca­tion filed ear­lier this month for sin­gle-brand re­tail un­der the state-of-the-art cat­e­gory, China’s lead­ing smart­phone maker Xiaomi sought per­mis­sion to forego the 30% sourc­ing norm for a range of its prod­ucts in­clud­ing Wi-Fi am­pli­fiers, Blue­tooth speak­ers and power banks.

The three-mem­ber spe­cial panel formed by govern­ment to de­fine cut­ting edge tech­nol­ogy for the pur­pose of re­lax­ation of sourc­ing norms in sin­gle-brand re­tail will now con­sider all such pro­pos­als sub­mit­ted un­der this cat­e­gory on a case to case ba­sis. “Any tech­nol­ogy which has never been made be­fore in In­dia and can­not be repli­cated is wor­thy of be­ing con­sid­ered un­der the cut­ting edge def­i­ni­tion,” a se­nior govern­ment of­fi­cial said, re­quest­ing not to be named.

The panel com­prises the sec­re­tary of the De­part­ment of In­dus­trial Pol­icy and Pro­mo­tion (DIPP), mem­ber of the NITI Aayog and rep­re­sen­ta­tive of the ad­min­is­tra­tive min­istries in­clud­ing tele­com and in­for­ma­tion tech­nol­ogy.

Be­sides Xiaomi, US-based Ap­ple has ap­plied for a li­cence for sin­gle­brand re­tail and sought ex­emp­tion from sourc­ing norm to bring sta­teof-the-art tech­nol­ogy to In­dia.

Ap­ple’s ap­pli­ca­tion is be­ing con­sid­ered for ap­proval by the govern­ment and has been for­warded by DIPP to the fi­nance de­part­ment. The com­pany cur­rently sells its prod­ucts in In­dia through a net­work of fran­chisee-owned stores. The govern­ment al­lowed 100% FDI in sin­gle-brand re­tail in Jan­uary 2012. Up to 49% FDI is al­lowed through the au­to­matic route and above that with the ap­proval of the For­eign In­vest­ment Pro­mo­tion Board. Be­yond 51% FDI, it is re­quired that 30% of the value of goods be sourced from In­dia, prefer­ably from mi­cro, small and medium en­ter­prises, vil­lage and cot­tage in­dus­tries, ar­ti­sans and crafts­men.

Be­sides, DIPP is re­view­ing the manda­tory lo­cal sourc­ing re­quire­ment of 30% in sin­gle-brand re­tail, es­pe­cially for com­pa­nies which source glob­ally from In­dia. DIPP has asked Swedish ap­parel brand H&M to make a pre­sen­ta­tion, de­tail­ing its over­all sourc­ing from In­dia for the global mar­ket af­ter the com­pany raised con­cerns over the sourc­ing norm for sin­gle­brand re­tail. “We want to cre­ate more jobs in the country and for that we need to sim­plify rules in­stead of adding more con­di­tions for com­pa­nies to en­ter In­dia,” the of­fi­cial said.

In­dia scaled the high­est mark of $51 bil­lion in FDI be­tween April 2015 and Fe­bru­ary this year. FDI equity in­flow recorded a growth of 44% be­tween June 2014 and Fe­bru­ary 2016, reach­ing $63.16 bil­lion, from $43.87 bil­lion in the pre­vi­ous 21-month pe­riod.

Il­lus­tra­tion: ARINDAM

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