Friday, May 25, 2012: 02:34:23 PM

Retail Poll Feature

Solving the sourcing norm mystery in single brand retail

In a survey conducted by Retailing360, majority of the respondents agreed that the sourcing norms for single brand retail are irrelevant today

While the 30% sourcing norm mandated for international retailers raised hopes for the small-scale sector in India, there were several arguments against the concept. Firstly, for brands that require products of meticulous engineering such as watches or instruments, it would be impossible to produce locally. Also, the entire process of sourcing products from the local market could have ended up becoming a cumbersome and expensive process.

To do away with the hassle, the Indian government announced that retailers may source 30% of their products from the MSME sector belonging to the international market. In other words, both local and international MSMEs will get a fair deal in this regard. However, the move makes the sourcing norm almost nullified raising the question about its introduction in the first place. In a survey conducted by Retailing360, voters appeared divided in their opinion regarding the sourcing norms. While 50% agreed that the sourcing norms for single brand retail are irrelevant today, 33% felt the contrary while the remaining (17%) had no opinion.

Boost to investment
According to Prof A Ramaswamy Iyengar, faculty (Retail) at Welingkar Institute of Management Development and Research, Mumbai, “The single brand retailers have been wary of entering the market due to the various norms. If the window is opened completely without norms, it would greatly boost foreign investment in the country.”
According to brand expert and public relations professional Enakshi Kundu, “I think some single brand retailers are likely to wait a little longer to see how the market behaves. India has lost its sheen slightly as an investment destination due to the macroeconomic fluctuations and political issues regarding the single and multi-brand retail. If the norms are removed altogether, the interest is likely to recover.”
In spite of the controversy surrounding FDI in retail, several single brand retailers especially from Europe have been keen to invest in the market. It is thus crucial for the government to ensure that the interest is maintained and norms like insignificant 30% sourcing are not highlighted.
Tias Chakraborty

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