Faced with the wrath of the Opposition, its own allies and medium and small scale enterprises (MSEs) over the issue of sourcing of products, Union Commerce and Industry Minister Anand Sharma on Monday asserted that 30 per cent sourcing under FDI in multi-brand retail has been made mandatory from Indian MSEs only.

Dispelling doubts that the clause had included MSEs from any part of the world, Mr. Sharma told journalists: “That was misconstrued in the Cabinet. Thirty per cent of the sourcing has been made mandatory from Indian MSEs,'' he said.

However, Mr. Sharma's assertion is in total contrast to the official note issued last week, which stated that the 30 per cent sourcing by global retailers can be done from anywhere in the world and is not India-specific. This provision for procurement from small units will not violate the WTO obligations.

“We have taken a decision, we did it for solar mission and telecom sector and we have deliberated upon it. It is important as it will create jobs, give a fillip to manufacturing of micro and small industry,'' he said.

Small enterprises had raised concerns over the clause of 30 per cent sourcing from MSEs anywhere in the world, saying this may help the cheap Chinese goods rather than Indians in view of cheaper labour in the neighbouring country.


“Chinese products are a nuisance for us. And after this FDI policy, it will become more difficult for us,'' the Federation of Indian Micro & Small and Medium Enterprises (FISME) had stated.

However, officials in the Industry Ministry continued to maintain that restricting sourcing of 30 per cent only to India would violate WTO norms.

“According to the Cabinet decision of November 24, the overseas players have to do 30 per cent of their sourcing from MSEs which, however, can be done from anywhere in the world and is not India-specific. The only condition is that these MSEs must not have more than $1 million [Rs.5 crore] investment in plant and machinery — in line with the Indian MSME.''