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FDI in retail still faces hurdles: Industry secretary

Mita Basak (Professional)     02 June 2011

Mita Basak
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FDI in retail still faces hurdles: Industry secretary


India has yet to decide to allow foreign direct investment in multi-brand retail, a senior government official said, despite a government panel's recent recommendation in favour of such a policy to help fight inflation, an indication that hurdles remain.

"The issue is still at discussion stage, and no Cabinet note has been prepared in this regard by the DIPP (Department of Industrial Policy and Promotion)," R P Singh, industry secretary told Reuters.

An inter-ministerial group headed by Kaushik Basu, chief economic adviser in the finance ministry, last week recommended allowing foreign direct investment in multi-brand retail to tame inflation and cut farm gate and retail price differences.

Global retailers such as WalMart and Carrefour have long sought greater access to a fast-growing but restrictive Indian retail sector that is dominated by mom and pop operators.

"It is time for India to allow foreign direct investment in multi-product retail and the IMG recommends that the government considers this at the earliest," Basu told reporters last week.

India currently allows 51% FDI in single-brand retail and 100% in wholesale cash-and-carry operations.

The industry department issued a discussion paper last year asking for inter-ministerial and public comments on opening of the multi-brand retail.

The finance ministry has not yet submitted its views on the issue, while opposition parties led by the Bharatiya Janata Party have expressed strong opposition, citing its impact on domestic industry.




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