Back-end infra in non-FDI states is positive: PwC India

The permission to allow the establishment of back-end infrastructure in states where FDI is not allowed,  is a positive, says Goldie Dhama, associate director - regulatory services, PwC India. Speaking to CNBC-TV18, Dhama adds that the clarification mandating the opening of stores owned and operated only by the company needed to be further deliberated by the government.

Below is the edited transcript of Goldie Dhama's reaction on CNBC-TV18

Q: What your views on the government's clarifications?

A: I haven't had a chance to look at them but what I understand is that the government’s permission to establish backend infrastructure in states even where foreign direct investment (FDI) is not allowed for undertaking multi brand retail trading, is a strong positive. However, the fact that the government has clarified that the entire investment has to come in only by way of greenfield was to an extent expected. However, the fact that investment cannot be made in installments will sort of push investors back to an extent.

Q: Sourcing restrictions amongst group companies, the requirement of 50-percent investment in backend infrastructure within three years of the first tranche of FDI, the requirement of 30-percent sourcing from small-scale industry are some of the issues that the government says are still under consideration. What is your view?

A: One of the points says that the company can only set up shops which are company-owned and -operated is something that needs to be deliberated because today a company can widen its presence through a franchised route. The government could stipulate appointed franchises in those states in which foreign investment is not permitted.