Organised retailers gain across the board

Future Retail (up 1.42%), Trent (up 1.32%) and Shoppers Stop (up 0.87%), edged higher.

The BSE Sensex was down 81.02 points, or 0.42% at 19,142.26.

In order to make multi-brand retail more attractive to foreign investors, the panel reportedly suggested that the foreign direct investment (FDI) limit be raised to 74% under the Foreign Investment Promotion Board (FIPB) route from 51%.

In case of single-brand retail, it suggested easing of the norms by advocating 49% investment under the automatic route. Currently, the government allows 100% FDI under the approval route.

The multi-brand retail sector was thrown open to foreign investors in September 2012, but has failed to see any investment so far due to stringent rules set by the government.

The government on 6 June 2013 clarified that the foreign supermarkets entering India must invest in new supply chain infrastructure, such as warehouses and cold-storages, rather than buying existing assets. The government allowed global supermarket operators to enter India in September 2012, and stipulated at the time that at least 50% of the investment made by the foreign company must be in supply chain infrastructure.

The government said investments in the supply chain and logistics networks could be made in any Indian state, irrespective of whether the state supports the entry of foreign retailers. The government also said global retailers have to source 30% of their processed goods, not including fresh produce, from small industries and will only be allowed to sell these goods through retail stores, and not wholesale outlets.

The rules are a big setback for existing domestic retailers such as Bharti Retail, Future Retail and Spencer's that were hoping to cash out by selling at least part of the stake in front-end retail stores to foreign retail giants.

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