Amid sharp divisions between two ministries on relaxing sourcing norms for FDI in single brand retail, Union Minister Vayalar Ravi has shot off a letter to the Prime Minister cautioning that easing of 30 per cent procurement requirements will lead to dumping of cheap imported goods in the country.
"If there is any relaxation in this norm, itself, it would lead to major upsurge in cheap imported goods, which are being made in non-transparent economies where direct and indirect subsidy regimes coupled with currency controls, which ensure unfair exports to third countries," Ravi, Minister for Micro, Small and Medium Enterprsises (MSME), said in his letter.
Any dilution of this norm, is therefore, fraught with adverse economic as well as political consequences, he added.
In a bid to accommodate demands of Swedish furniture chain IKEA over sourcing norms for FDI in single brand retail, Department of Industrial Policy and Promotion (DIPP) has proposed allowing foreign retailers to procure from large Indian firms as well.
On the other hand, Micro, Small and Medium Enterprises (MSME) Ministry has suggested that foreign retailers be allowed to source from Micro and Small Enterprises (MSEs) only.
Besides, the ministry said a foreign retailer could be given a period of seven years even after the units have grown in size and exceeded the stipulated USD one million investment limit in plant and machinery.
Commerce and Industry Minister Anand Sharma is likely to meet Ravi tomorrow to thrash out divergences on sourcing norms related to FDI in single brand retail.
Ahead of the meeting, DIPP Secretary Saurabh Chandra and his MSME counterpart R K Mathur discussed ways on how to address issues raised over the mandatory 30 per cent sourcing norm, specially those raised by IKEA, which plans to invest Rs 10,500 crore in India.
"DIPP has proposed that 30 per cent sourcing will be done by foreign retailers from Indian units, including large ones, but preferably from micro, small and medium units, where it is feasible," a source said.
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