(REOPENS FES28)

USIBC said for India to reach its goal of sustaining its role as a global economic powerhouse with sustainable inclusive growth, buildings must be modernised, property markets must be made more transparent, land acquisition and title issues must be resolved fairly, and foreign investment must be attracted and maintained in the sector. Noting that currently foreign investment in existing real estate is prohibited, and any greenfield investment requires a three year capital lock-in period, USIBC asked the Finance Minister to "allow foreign companies to acquire direct ownership in real estate" for investment. "Greenfield investment to which foreign development investment is currently targeted promotes horizontal urbanisation and urban sprawl. This policy increases the cost of delivering services, and significantly undermines India's stated goals of greener development and coordinated infrastructure build-out. "Allowing the purchase of already-built properties enables a more transparent, more liquid marketplace," USIBC said urging the Finance Minister to reconsideration lifting current restriction in this regard. Welcoming the Union Government's move to lift foreign investment caps for the single-brand retail sector, USIBC said this policy has the potential to be a true benefit to the Indian economy as new investors consider entering the market and existing investors consider expanding operations. "However, the current guidance from the Government of India includes troubling provisions which merit further consideration by industry, including mandatory sourcing of 30 per cent of product sold value from small industries," it said. On FDI in multi-brand retail, USIBC said the timely implementation for industry and regulators alike will remain critical to harvesting these benefits. Welcoming foreign investment into modern retail will help connect farmers to markets and remove intermediaries from the supply chain. Farmers will receive remunerative prices for their products, consumer choice will expand to meet a growing market, and supply chains will be developed throughout the country, it said. At the same time, USIBC said the recently issued rules on cash & carry wholesale trading have had a negative impact on employment in the informal sector. "These rules placed an undue burden on small-scale retailers, particularly including those whose annual income is quite small relative to the cost of a trader's licence," USIBC said. It also asked the Indian Government to create a special category for small-scale and informal retailers whose annual purchases and sales do not justify the purchase of traders' licenses.