Published on Mon, Apr 12, 2010 at 10:17 | Source : Reuters
Updated at Mon, Apr 12, 2010 at 11:20
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Ministries start talks on FDI in retail
The government has launched discussions between ministries about opening multi-brand retail to foreign direct investment, a politically sensitive issue, the Economic Times reported on Monday
The government has launched discussions between ministries about opening multi-brand retail to foreign direct investment, a politically sensitive issue, the Economic Times reported on Monday.
The Department of Industrial Policy and Promotion has written to the finance ministry on the issue and is also in talks with the agriculture ministry about the pros and cons of the move, the paper said, citing an unnamed official of the department.
"The move to open up retail sector is part of the government's strategy to plug gaps in the existing food supply chain and more importantly, help bring down the difference between farm-gate prices and retail prices, the report quoted the official as saying.
The department will soon circulate a discussion paper to build consensus on the issue, the report said.
India only allows foreign direct investment in cash-and-carry, or wholesale ventures, but not in multi-brand retail.
There are restrictions on foreigners in retail because of opposition from millions of small shopkeepers that are valuable vote banks during elections.
Foreign retailers can enter retail through franchise arrangements with local players, and are allowed to own up to 51% in single-brand retail, while 100 percent ownership is permitted in cash-and-carry ventures.
The report said that to address the concerns of critics of foreign investment in retail, the government is likely to insist that control remains in Indian hands.
