November 24th, 2011
Email this page

51% FDI in multi brand retail cleared

fdi-in-retailNew Delhi: The Indian Cabinet cleared 51 per cent foreign direct investment (FDI) in multi-brand retail. The Cabinet also cleared 100 per cent FDI in single-brand retail. Commerce and industry minister Anand Sharma said that he would give a statement in Parliament on retail FDI.

The Union Minister for Commerce and Industry Anand Sharma was entrusted with the responsibility of convincing Trinamool Congress from being a roadblock towards allow global retail giants like Wal Mart, TESCO and Carrefour to enter India. India has now opened the $450 billion retail market to global giants.

When Trinamool congress raised their concern regarding the future of farmers and small traders Mr Anand Sharma said that the multi- brand retailers would have to compulsorily make 30 percent of their purchases from these sectors.

DMK ally which was initially opposed to the move gave conditional support by absenting itself from the cabinet decision.

The nod for multi-brand retail comes with some riders: Foreign players should pump 50 per cent of FDI in the back-end infrastructure. The Centre has fixed minimum FDI per project at $100 million, restricting the entry of small players.

Foreign retailers will be allowed to set up sales centres only in cities with population more than 1 million. These players will have to source at least 30 per cent of manufactured and processed products from small-scale units.

Currently, India allows 51 per cent FDI in single brand retail and 100 per cent FDI in cash and carry format of the business. The decision to open up the sector is driven by the inability of the government to tackle the surge in inflation.

Most ministries, including those of finance and textiles were in favour of the industry ministry’s proposal to open the politically sensitive sector to foreign players.

A decision on the sensitive issue is pending for over two years as opposition parties are against foreign investment in this sector. The $600-billion segment is dominated by small kirana shops. The Opposition has expressed concerns that allowing major global retailers would lead to unemployment among the unorganised sector.




Press ctrl+g to toggle between English and Malayalam.