NEW DELHI: Next, foreign direct investment (FDI) could be allowed for opening retail stores in electronics, construction materials, sport goods and stationery. These outlets or chain of stores would not be required to be just single-brand stores, but can stock and sell multi-brand products.
Commerce and industry minister Kamal Nath on Tuesday gave reporters an indication of the government’s thinking on the next round of calibrated opening up of the retail trade to FDI. He said permitting FDI in specific segments such as electronics, construction materials, sport goods and stationery is indeed under consideration.
The FDI policy continues to ban FDI in retail trade. Early this year, the government created a small opening for FDI in single-brand retail outlets. But foreign equity participation is capped at 51% and each investment proposal needs a case-by-case clearance from the Foreign Investment Promotion Board. Only four single-brand FDI proposals have since been cleared.
FDI is, however, allowed up to 100% in cash-and-carry wholesale trade and many international retailers have taken advantage of that to position themselves in the Indian market.
The recent tie-up between Bharti and the world’s largest retailer, Wal-Mart, for a cash-and-carry wholesale trade joint venture coupled with the Indian company’s plans for front-end retail business have drawn attention to the “gray areas” in government’s FDI policy, necessitating a rethink, officials said.
Commerce ministry, according to officials, has prepared a cabinet note in consultation with the consumer affairs ministry for calibrated changes in the FDI policy in the retail sector. The cabinet is expected to take up the paper next month.
In fact, the policy review is being made at the behest of Prime Minister Manmohan Singh. Singh is said to have asked Nath recently to come up with a policy paper exploring areas in retail trade that can be opened up for FDI without hurting farmers and small store owners. The government wants to encourage foreign investment in back-end of retail activity like logistics, cold chain and technology which could benefit farm goods producers and even small retailers.
The details of the next tweak in FDI policy in retail trade would be evolved after consultations both within the government and outside with the allied political parties. The extent of foreign equity participation that may be allowed for retail trade in specific segments and the safeguards to be built into the policy are still not clear.
Source : DNA
Commerce and industry minister Kamal Nath on Tuesday gave reporters an indication of the government’s thinking on the next round of calibrated opening up of the retail trade to FDI. He said permitting FDI in specific segments such as electronics, construction materials, sport goods and stationery is indeed under consideration.
The FDI policy continues to ban FDI in retail trade. Early this year, the government created a small opening for FDI in single-brand retail outlets. But foreign equity participation is capped at 51% and each investment proposal needs a case-by-case clearance from the Foreign Investment Promotion Board. Only four single-brand FDI proposals have since been cleared.
FDI is, however, allowed up to 100% in cash-and-carry wholesale trade and many international retailers have taken advantage of that to position themselves in the Indian market.
The recent tie-up between Bharti and the world’s largest retailer, Wal-Mart, for a cash-and-carry wholesale trade joint venture coupled with the Indian company’s plans for front-end retail business have drawn attention to the “gray areas” in government’s FDI policy, necessitating a rethink, officials said.
Commerce ministry, according to officials, has prepared a cabinet note in consultation with the consumer affairs ministry for calibrated changes in the FDI policy in the retail sector. The cabinet is expected to take up the paper next month.
In fact, the policy review is being made at the behest of Prime Minister Manmohan Singh. Singh is said to have asked Nath recently to come up with a policy paper exploring areas in retail trade that can be opened up for FDI without hurting farmers and small store owners. The government wants to encourage foreign investment in back-end of retail activity like logistics, cold chain and technology which could benefit farm goods producers and even small retailers.
The details of the next tweak in FDI policy in retail trade would be evolved after consultations both within the government and outside with the allied political parties. The extent of foreign equity participation that may be allowed for retail trade in specific segments and the safeguards to be built into the policy are still not clear.
Source : DNA