Inter-ministry group pitches strongly for FDI in retail

Its case bolstered by the unabated food inflation, an inter-ministerial group (IMG) on Friday made a formal recommendation to allow foreign direct investment in multi-brand retail.

Calling the the Indian retail sector "primitive", the government's chief economic advisor Kaushik Basu, who headed the IMG, told newspersons in New Delhi, ''It's time for India to allow FDI in multi-product retail, and IMG recommends that the government consider this at the earliest."

Besides this, the IMG also suggested revamping the agriculture produce marketing committee law to reduce the gap between farm gate and retail prices and contain inflation, "which has emerged as a major concern in the past few months".

Inflation, stood at 8.66 per cent in April, much above the Reserve Bank of India's 'comfort level' of 5-6 per cent. Food inflation was 8.55 per cent for the week ended 14 May.

The IMG, constituted in February by Prime Minister Manmohan Singh, however said FDI in multi-brand retail should be allowed in a calibrated manner.

"We are not saying just open the gates and let them (foreign investors) anywhere and everywhere," Basu said, adding initially few foreign investors should be allowed and that too in specific areas away from cities.