Lok Sabha Question No. 4362 (UNSTARRED), answered on 2016-12-12
Subject: Multi Brand Retail Stores
Ministry: COMMERCE AND INDUSTRY
Asked by: VASANTHI M.

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

## LOK SABHA

UNSTARRED QUESTION NO. 4362. TO BE ANSWERED ON MONDAY, THE 12 TH  DECEMBER, 2016.

## MULTI BRAND RETAIL STORES

## 4362.  SHRIMATI VASANTHI M.:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state: वाणिज् यवव द्यग ं ्री

- (a) whether the Government has allowed the foreign retailers to open multi brand stores in the country;
- (b) if so, the details thereof; and
- (c) the number of foreign companies which have applied/registered to open multi brand stores in the country at present, State/ UT-wise, country-wise?

## ANSWER

## वाणिज् यवव द्यग ााज् यं ्रीस् वतं ््रभााा(स्रींतंरीिरंमलााीरीतंाांि( THE MINISTER OF STATE (INDEPENDENT CHARGE) OF THE MINISTRY OF COMMERCE & INDUSTRY (SHRIMATI NIRMALA SITHARAMAN)

- (a)&(b): FDI policy on Multi-brand retail trading is as per Annexure.
- (c): Only  one  foreign  company  applied  to  open  multi-brand  retail  stores  in Maharashtra and Karnataka. The proposal was approved by the Government on 04.03.2014.

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## ANNEXURE  REFERRED  TO  IN  REPLY  TO  PART  (a)  OF  LOK  SABHA UNSTARRED QUESTION NO. 4362 FOR ANSWER ON 12 th   DECEMBER, 2016.

## 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 crosschecked,  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  multibrand retail trading.
11. (x) Applications would be processed in the Department of Industrial Policy & Promotion, to determine whether the proposed investment satisfies the  notified  guidelines,  before  being  considered  by  the  FIPB  for Government approval.
- (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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