The Indian government might consider allowing 49 per cent foreign direct investment (FDI) in multi-brand retail of products that include gems, jewellery and apparel.
According to a senior government official, the Centre might consider taking this step only after National Council of Applied Economic Research (NCAER), which has been mandated to study the effects of multi-brand retail in India, submits its report next month. As of now, the government does not allow FDI in multi-brand retail. Only 51 per cent is permitted in single-brand retail.
The government is of the opinion that foreign players should not be permitted majority stake in retail companies and, hence, will allow 49 per cent share. NCAER also holds the view that the role of foreign players in the sector should be limited. Several safeguard measures may be made mandatory when FDI in retail is cleared.
This move by the government will mean that big names including Wal-Mart, Metro and Carrefour can enter the Indian market through joint ventures for multi-brand stores. As of now, Wal-Mart and Metro are involved in cash-and-carry wholesale trade where 100 per cent FDI is permitted.