India may allow 51 per cent FDI in multi-brand retail business: reports
10 Jun 2011
India is set to open multi-brand retail sector and may allow foreign direct investment of up to 51 per cent, with at least half the funds invested in infrastructure such as cold storage, according to media reports today.
An inter-ministerial group led by Kaushik Basu, chief economic adviser in the finance minister, is reported to have moved a formal proposal to allow foreign direct investment in multi-brand retail to rein in inflation and slash farm gate and retail price differences.
Reports cite Basu's recent comments to indicate that a decision in the matter could be taken soon.
Global retailers, including Wal-Mart Stores, Carrefour, Tesco and Metro AG have long been pushing for the opening of the $450 billion retail sector in India to foreign investment.
Currently, the government allows FDI to the extent of 51 per cent in single-brand retail and 100 per cent in wholesale cash-and-carry operations.
According to Mail Today, the commerce and industry ministry has floated a proposal to open the supermarket sector by 51 per cent, while a report in the Hindustan Times says that retailers would need to source at least 30 per cent of manufactured items from smaller companies and sell a third of their goods to small retailers.
The large deep discount stores, such as Walmart, Tesco and Carrefour, would be allowed only in 10-lakh-plus cities and would be restricted to only those states that allow FDI in multi-brand retail, the HT report said.
The proposal is expected to come up for cabinet approval in the next few weeks, according to the HT report.
However, there may be tough opposition to the move and BJP leader Ravi Shakar Prasad has made it clear that the party would oppose it as it would lead to large-scale unemployment, the HT report added.
