What you need to know about FDI in multi-brand retail

Moneycontrol Bureau

The Union Cabinet late Friday approved foreign direct investment (FDI) in multi-brand retailing, subject to specific conditions. Here are the salient features of the policy.

What the conditions under which retail in multi-brand retail will be allowed?

Retail sales outlets may be set up in those States which have agreed or agree in future to allow FDI in multi-brand retail. Retail sales outlets may be set up only in cities with a population of more than 10 lakh as per 2011 Census and may also cover an area of 10 kms. In States/ Union Territories not having cities with population of more than 10 lakh, retail sales outlets may be set up in the cities of their choice, preferably the largest city.

Is it mandatory for state governments to implement the policy?

No, it is not.

Which are the states that have agreed to support FDI in multi-brand retail?

The Chief Ministers of Delhi, Assam, Maharashtra, Andhra Pradesh, Rajasthan, Uttarakhand, Haryana and Governments of the State of Manipur and the Union Territory of Daman & Diu and Dadra and Nagar Haveli, have expressed support for the policy in writing. The Chief Minister of Jammu & Kashmir, through his press statements, has publicly endorsed the policy and asked for its implementation.

Which are the states opposed to the policy?

The State Governments of Bihar, Karnataka, Kerala, Madhya Pradesh, Tripura and Odisha have expressed reservations.

What are the obligations on the foreign investor?

At least 50% of total FDI brought in shall be invested in 'backend infrastructure' within three years of the induction of FDI. These include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house, agriculture market produce infrastructure etc. Expenditure on land cost and rentals, if any, will not be counted for purposes of backend infrastructure.

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