THE Union Cabinet yesterday approved the
proposal for amendment in the existing FDI policy in Multi-Brand Retail
Trading (MBRT) in para 6.2.16.5(1) (iii), (iv) and (vi) of 'Circular 1
of 2013 - Consolidated FDI Policy.
a) Amendment in para 6.2.16.5(1) (iii) of 'Circular 1 of 2013- Consolidated FDI Policy' to read as follows:
"At
least 50% of total FDI brought in the first tranche of US$ 100 million,
shall be invested in 'backend infrastructure' within three years, where
'back-end infrastructure' will include capital expenditure on all
activities, excluding that on front-end units. For instance, back-end
infrastructure will include investment made towards processing,
manufacturing, distribution, design improvement, quality control,
packaging, logistics, storage, ware-house, agriculture market produce
infrastructure etc. Expenditure on land cost and rentals, if any, will
not be counted for purposes of backend infrastructure. Subsequent
investment in the back-end infrastructure would be made by the MBRT
retailer as needed, depending upon his business requirements".
b) Amendment in para 6.2.16.5(1)(iv)of 'Circular 1 of 2013 - Consolidated FDI Policy' to read as follows:
"At
least 30% of the value of procurement of manufactured/ processed
products purchased shall be sourced from Indian micro, small and medium
industries which have a total investment in plant & machinery not
exceeding US $ 2.00 million. This valuation refers to the value at the
time of installation, without providing for depreciation. The 'small
industry' status would be reckoned only at the time of first engagement
with the retailer and such industry shall continue to qualify as a
'small industry' for this purpose even if it outgrows the said
investment of US$ 2.00 million, during the course of its relationship
with the said retailer. Sourcing from agricultural co-operatives and
farmers co¬operatives would also be considered in this category. The
procurement requirement would have to be met, in the first instance, as
an average of five years' total value of the manufactured/ processed
products purchased, beginning 1st April of the year during which the
first tranche of FDI is received. Thereafter, it would have to be met on
an annual basis".
c) Amendment in para 6.2.16.5(1)(vi) of 'Circular 1 of 2013 - Consolidated FDI Policy' to read as follows:
"Retail sales outlets may be set up only in cities with a population
of more than 10 lakh as per the 2011 Census or any other cities as per
the decision of the respective State Governments, and may also cover an
area of 10 kms around the municipal/urban agglomeration limits of such
cities; retail locations will be restricted to conforming areas as per
the Master/Zonal Plans of the concerned cities and provision will be
made for requisite facilities such as transport connectivity and
parking".
The amendment in the extant FDI policy relating to Multi-Brand Retail
Trading in respect of 'small industry' will bring in a balance between
the business exigencies of the MBRT entity and intent of the policy
which is to extend the benefits of the FDI policy in multi-brand retail
trading to a larger constituency of small industries. The amendment in
the provision regarding 'back-end infrastructure' will give more clarity
to the policy. The amendment to the provision regarding location of
retail outlets will bring in parity in the policy as it is proposed to
extend such dispensation to all States.
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