The hopes of the lobby that wants foreign investment in retail trade were dashed on Monday as the government said that there is no proposal to allow FDI in the retail.
“There is no proposal to change the current (FDI) policy on retail trade,” said the minister of state for commerce and industry, Mr Jyotiraditya Scindia, in the Lok Sabha in a written reply. The minister said that retail is a labour intensive sector and is the second largest employer after agriculture.
“The government is fully committed to securing the legitimate interests of all stakeholders engaged in the retail business. The government also fully recognises the need to ensure that small retailers are not adversely affected by the growing organised retail and that there is no adverse effect on employment,” said Mr Scindia.
Currently, FDI is not permitted in the retail trade, except in single brand retailing where FDI upto 51 per cent is permitted, with prior government approval. There is also a condition that products should be sold under the same brand internationally and single brand product retailing would cover only products which are branded during manufacturing.
A government sponsored study by ICRIER found that unorganised retailers in the vicinity of organised retailers experienced a decline in volume of business and profit in the initial years after the entry of large retailers. However, the adverse impact on sales and profit weakens over time.
Source: The Asian Age