The government has moved a formal proposal to allow foreign direct investment of up to 51 per cent in multi-brand retail stores although with a few riders. At present, FDI in multi-brand retail business is prohibited in India. The large deep discount stores, such as Walmart, Tesco and Carrefour, will be all owned only in 10-lakh-plus cities and only in those states which allow FDI in multi-brand retail.
According to the proposal, piloted by the department of industrial policy and promotion last month, at least 50% of the total investment should be made for creating back-end infrastructure, such as building cold storage chain and warehouses.
And the retailers will have to keep the RBI and the Foreign Investment Promotion Board in the loop in this regard.
The proposal is expected to come up for cabinet approval in the next few weeks.
But the government may have face tough opposition before fully opening up the market to global retailers.
Ravi Shankar Prasad, BJP leader, said the giant stores would affect the neighbourhood mom-and-pop stores and street vendors.
“We oppose it because it will lead to large-scale unemployment,” Prasad told HT.
But as a safeguard measure, the government has proposed riders like these stores will have to sell at least one-third of their goods to small retailers and source at least 30 per cent of manufactured items from small and medium enterprises.
Source : Hindustan Times