In the area of single-brand retail, any firm seeking waiver of the mandatory 30% local sourcing norms would have to establish a manufacturing facility in the country. For new investors, local sourcing was one of the key impediments that had hitched the entry of new investment.
Foreign retail chains putting in more than 51% via FDI in the single-brand sector must still source 30% of their products from India. But the sourcing is no longer mandatory from small- and medium-sized industries.
The condition to source to from small industries had proved a barrier for companies such as furniture giant IKEA, which is eyeing to invest in India.