FDI in retail can boost business, says expert

Foreign direct investment in organised retail, if allowed, can bring in a flurry of economic activity to India by global players, an expert with a US-based think-tank said today.     

"FDI (in organised retail) is allowed in most of the countries in the world ... Why not here. If the government opens it to FDI, there will be a flurry of (activity) by foreign players who will not only bring in investible funds but also global expertise and knowledge, much needed to develop this growing sector," the International Food Policy Research Institute Director (Asia) Ashok Gulati said.     

FDI in multi-brand retail is not allowed in India and it is permissible only for the wholesale cash and carry firms and in the single brand retail.     

The organised retail is growing annually by over 70 per cent since 2002. However, since the multi-brand domestic retail sector is in the infancy stage, it has shown significant expansion on a low base, Gulati said on the sidelines of a function here.     

"Let the domestic players take first positions," he said adding FDI could follow.     

How soon the sector can be thrown open to the foreign players depends on "political wisdom", Gulati said.

Several political parties, including the Bharatiya Janata Party and the Left parties are opposed to FDI in retail. In fact, the Communist Party (Marxist) has accused the government of allowing back-door entry for foreign retail players.     

"The organised food and grocery retail which was almost non-existent seven years back has been growing at a phenomenal pace ... This trend is likely to continue for the next 10-15 years not to rule out some bumpy ride during 2008-2010," he said.