Not everything can be termed “state-of-the-art,” says Indian government to facilitate FDI

In order to smooth the FDI process as per the new and relaxed sourcing norms, the Department of Industrial Policy and Promotion (DIPP) of India has said that it would now set a definition for the terms "cutting edge" and "state-of-the-art".

DIPP will soon set up a committee which would lay down the definition of these terms in black and white, so that no confusion can delay or abuse the policy.

The committee would comprise of the DIPP secretary, member of the Niti Aayog, and representatives of the administrative ministries, which would also include the telecom and information technology ministry.

This is because two mobile manufacturers, Apple and Xiaomi, have sought to benefit from the relaxed norms and want to open single-brand outlets in India, a major market for them.

As per the new norms announced by DIPP last year, companies bringing cutting edge technology to the country will be allowed to open single-brand outlets without being subjected to the rule mandating at least 30% local sourcing. This was done to encourage high-end single-brand retailers to open stores in India.

"Companies can read between the lines even if there is a clear definition in place. Therefore, the onus is on the regulator to minimise any lack of clarity," Devraj Singh, executive director, tax and regulatory services at consultancy EY, told ET.

Image source