Goods sourced from SEZ by SBRs involving FDI beyond 51% considered as sourcing from India, DPIIT

As per news source, the Department for Promotion of Industry and Internal Trade (DPIIT) said that goods which are sourced from Special Economic Zones (SEZ) by single-brand retailers involving FDI beyond 51% would qualify as sourcing from India. DPIIT said this in a clarification to Single Brand Retail (SBR) entities.

“..it may be clarified that sourcing of goods from such units would qualify as sourcing from India for the purpose of 30% mandatory sourcing from India for proposals involving FDI beyond 51%, subject to SEZ Act, 2005,”, said the DPIIT in a clarification circular.

The government also said that goods proposed to be sourced by an SBR entity from such units have to be manufactured in India.

This circular comes after the single-brand retailers asks for clarification on whether sourcing of goods from units located in Special Economic Zone (SEZ) would qualify as sourcing from India as per FDI Policy.

Sourcing of goods from SEZs is treated as imports, according to customs law.

As per FDI policy implement in 2018, 100% foreign investment is permitted but with 30% of the value of the goods sold from the country. This sourcing requirement is currently mandatory for first five years preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors.