The Clothing Manufacturers Association of India (CMAI) welcomes the changes made in the FDI rules under single brand retail. Local sourcing norms will be eased for FDI in single-brand retail sector.

CMAI says the eased FDI rules will provide greater flexibility to global fashion brands, improve the retail landscape of India, increase investments, and eventually employment in the country. However, CMAI is concerned that this could possibly affect garment manufacturing in the country. The eased rules will provide greater liberty to brands to source globally depending mainly on the cost competitiveness. This might result in brands’ limiting their sourcing requirement to only 30 per cent in blocks of five years from India, including sourcing for exports. CMAI feels in such a scenario, it is important that these sourcing clauses are closely monitored to ensure that sourcing from India is continuously increasing so as to be sync with the make in India drive. Currently, the FDI policy on single-brand retail trade provides for a 30 per cent local sourcing preferably from micro, small and medium enterprises, village and cottage industries, artisans and craftsmen where the FDI exceeds 51 per cent.

India’s FDI inflows in 2018-19 marked a six per cent growth over the previous year. The gains will be further consolidated in order to make India a more attractive FDI destination.