Lok Sabha Question No. 3891 (UNSTARRED), answered on 2018-03-19
Subject: FDI in Multi-Brand Retails
Ministry: COMMERCE AND INDUSTRY
Asked by: BOORA NARSAIAH GOUD

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION

## LOK SABHA

UNSTARRED QUESTION NO. 3891. TO BE ANSWERED ON MONDAY, THE 19 TH  MARCH, 2018.

## FDI IN MULTI-BRAND RETAILS

## 3891.  DR. BOORA NARSAIAH GOUD:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state:

## वाणिज् यवव द्योग म त्री

- (a) the details of norms for permitting multi-brand retail trading in the country;
- (b) the amount of Foreign Direct Investment (FDI) that the country could get since introduction of this policy, Statewise;
- (c) whether it is true that the Government is planning to tweak the above norms and is intending to permit FDI in multi-brand retailing;
- (d) if so, the details thereof and the reasons therefor; and
- (e) the  reasons for permitting FDI in multi-brand retail trading in the country by the Ministry of Food Processing Industries?

## ANSWER

वाणिज् यवव द्योग म त्रालयमेंराज् यम त्री(श्री सी.आर.चौधरी) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHRI C.R. CHAUDHARY)

- (a): The  detailed  FDI  Policy  including  norms  for  undertaking  multi-brand retail trading in the country is provided in para 5.2.15.4 of Consolidated FDI Policy Circular of 2017. A copy of relevant extract is at annexure. However, no decision has been taken with regard to implementation of FDI Policy in this sector.
- (b): FDI  inflow  in  the  country  is  not  maintained  State/UT-wise  but  RBI Regional Offices-wise. Accordingly, FDI equity inflow into the  country from introduction of this policy, as maintained, sector-wise and Regionwise is as under:

(FDI in US$ million)

| Sl No   | Regional Offices of RBI   | States Covered                                 |   2012-13 Apr-Mar |   2013-14 Apr- Mar |   2014-15 Apr-Mar |   2015-16 Apr- Mar |   2016-17 Apr-Mar |   2017-18 Apr-Dec |   Total |
|---------|---------------------------|------------------------------------------------|-------------------|--------------------|-------------------|--------------------|-------------------|-------------------|---------|
| 1       | MUMBAI                    | MAHARASHTRA, DADRA & NAGAR HAVELI, DAMAN & DIU |                 0 |                  0 |            115.01 |               23.9 |                 0 |                 0 |  138.91 |
| 2       | REGION NOT INDICATED      | REGION NOT INDICATED                           |                 0 |                  0 |             25.29 |                0   |                 0 |                 0 |   25.29 |
|         |                           | Grand Total                                    |                 0 |                  0 |            140.3  |               23.9 |                 0 |                 0 |  164.2  |

- (c) & (d): No such proposal is under consideration of the Government.
- (e): With  a  view  to  provide  benefits  to  farmers,  give  impetus  to  food processing industries and create employment opportunities, 100% FDI under  government  approval  route  has  been  permitted  for  trading, including  through  e-commerce,  in  respect  of  only  such  food  products which are manufactured and/or produced in India.

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## ANNEXURE

## ANNEXURE  REFERRED  TO  IN  REPLY  TO  PART  (a)  OF  LOK  SABHA UNSTARRED QUESTION NO. 3891 FOR ANSWER ON THE 19 TH   MARCH, 2018.

Extracts of Consolidated FDI Policy Circular of 2017, available on the Department of Industrial Policy and Promotion website (www.dipp.nic.in).

## 5.2.15.4 Multi Brand Retail Trading

| Sector/Activity            | %of Equity/ FDI Cap   | Entry Route   |
|----------------------------|-----------------------|---------------|
| Multi Brand Retail Trading | 51%                   | Government    |

- (1) FDI in multi brand retail trading, in all products, will be permitted, subject to the following conditions:
2. (i) Fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meat products, may be unbranded.
3. (ii) Minimum amount to be brought in, as FDI, by the foreign investor, would be US $ 100 million.
4. (iii) At least 50% of total FDI brought in the first tranche of US $ 100 million, shall be invested in 'back-end 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 backend infrastructure would be made by the MBRT retailer as needed, depending upon its business requirements.
5. (iv) 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 1 st April of the year during which the first tranche of FDI is received. Thereafter, it would have to be met on an annual basis.
6. (v) Self-certification  by  the company, to ensure compliance of the conditions at serial nos.            (ii),  (iii)  and  (iv)  above,  which  could  be  cross-checked,  as  and  when required.  Accordingly,  the  investors  shall  maintain  accounts,  duly  certified  by statutory auditors.
7. (vi) Retail sales outlets may be set up only in cities with a population of more than 10 lakh as per 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.
8. (vii) Government will have the first right to procurement of agricultural products.
9. (viii) The  above  policy  is  an  enabling  policy  only  and  the  State  Governments/Union Territories would be free to take their own decisions in regard to implementation of the  policy.    Therefore,  retail  sales  outlets  may  be  set  up  in  those  States/Union Territories which have agreed, or agree in future, to allow FDI in MBRT under this policy. The list of States/Union Territories which have conveyed their agreement is at (2) below. Such agreement, in future, to permit establishment of retail outlets under this policy, would be conveyed to the Government of India through the Department of Industrial Policy & Promotion and additions would be made to the list at (2) below accordingly.  The  establishment  of  the  retail  sales  outlets  will  be  in  compliance  of applicable State/Union Territory laws/ regulations, such as the Shops and Establishments Act etc.
10. (ix) Retail trading, in any form, by means of e-commerce, would not be permissible, for companies with FDI, engaged in the activity of multi-brand retail trading.
- (2)  List of States/Union Territories as mentioned in Paragraph 5.2.15.4(1)(viii)
1. Andhra Pradesh
2. Assam
3. Delhi
4. Haryana
5. Himachal Pradesh
6. Jammu & Kashmir
7. Karnataka
8. Maharashtra
9. Manipur
10. Rajasthan
11. Uttarakhand
12. Daman & Diu and Dadra and Nagar Haveli (Union Territories)

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