Govt. refuses to reduce mandatory local sourcing norm to 15%

Govt. refuses to reduce mandatory local sourcing norm to 15%

US-based retail giant Walmart might have suffered a jolt after the government turned down its request to reduce the mandatory local sourcing norm from 30 per cent to 15 per cent.

Walmart had requested the government to reduce the mandatory local sourcing norm to 15 per cent saying it would not be able to meet it. It said it could procure only around 20 per cent from local small units.

But, the government turned down the request. Confirming the decision, Union Agriculture Minister Sharad Pawar said, "We find no immediate reason to reduce this percentage."

The global retail giant's request for reduction in the local sourcing norm surfaced after the government diluted the controversial sourcing clause to allow foreign retailers to procure 30 per cent of their products from small & medium enterprises only at the of beginning of business.

A spokesperson for Walmart India said that they continued to study the viability of the government foreign direct investment (FDI) policy and remained steadfast in their belief in the vital value the retailer would bring to India. The spokesperson added that Walmart was committed to the India market, and planned to grow its business in the country.

The government allowed 51 per cent FDI in the multi-brand retail sector in September 2012. Only UK-based retailer Tesco has so far applied to open supermarket chains in India.

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