India’s government unwilling to give up controversial sourcing clause in FDI

Armani Casa flagship store in Miami, FL

The Indian government maintains a controversial 30% local sourcing clause for single-brand retailers as part of its Foreign Direct Investment (FDI) policy adopted earlier this year, despite speculation that it would change it.

The policy, released this week, retains the clause that requires any company investing more than 51% in a single-brand retailer to source 30% of the value of its products from small and medium-scale Indian enterprises. However, it will allow 100% foreign direct ownership in single-brand stores. This clause is regarding as a hurdle, for both mass market and luxury brands, hindering development and keeping away major international players.