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LATEST NEWS UPDATES | Six ministries to decide on FDI retail by Anindya Upadhyay

Six ministries to decide on FDI retail by Anindya Upadhyay

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published Published on Oct 7, 2010   modified Modified on Oct 7, 2010

An inter-ministerial panel will decide on the contentious issue of opening organised retail to foreign investment after examining stakeholder feedback to the discussion paper put out by the government.

“A panel of six ministries was constituted on September 27, which will be chaired by Kewal Ram, senior economic advisor in the consumer affairs ministry,” a government official told ET.

The committee will have representation from the department of industrial policy and promotion, department of commerce, department of economic affairs, agriculture ministry and ministry of micro, small and medium enterprises.

All concerned departments have been involved considering the sensitivity of the issue. “It is an important step in the formation of a Cabinet note on allowing FDI in multi-brand retail,” he said adding that the committee will begin deliberations in a week. The DIPP had floated a discussion paper, raising various points of concern on the issue in July and had asked for stakeholders’ comments on the same.

Global retail players like Bharti-Walmart have endorsed 100% opening of the sector without any caps adding, “recognising the government's stand to adopt a calibrated approach, we would endorse a position where as a first step, multi-brand retail is opened up at 49%.”

At present, foreign investment is not allowed in multi-brand retail and a decision has been difficult for the fear that it could affect small retailers.

“Any cap or restriction on FDI in this sector may result in potential loss of opportunities and avenues of inclusive growth of the retail sector,” French retail major Carrefour has said in its suggestion calling for 100% FDI. It also, added that if the government wants staggered opening of the sector, the FDI cap should be kept such that a foreign retailer is “entitled to make a minimum of 51% investment with rights to manage the company... ”.

Business chambers like the Federation of Indian Chambers of Commerce and Industry and the Confederation of Indian Industry have stated that the FDI cap should be within the range of 49-51%.

Entities like the Kisan Jagriti Manch, the Bharatiya Mazdoor Sangh and the Swadeshi Jagran Manch have strongly objected to the proposal.

After the inter-ministerial committee firms up views on the issue, the matter will be sent to the commerce and industry ministry, which will then approach the Union Cabinet with a recommendation. At present, foreign companies can operate the single-brand retail format or in the wholesale cash-andcarry business with FDI cap of 51%.


The Economic Times, 6 October, 2010, http://economictimes.indiatimes.com/news/economy/policy/Six-ministries-to-decide-on-FDI-retail/articleshow/6696557.cms


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