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Weeks before budget, industry again bats for FDI in multi-brand retail

"In line with 100% FDI in food retail, a similar policy could be considered for multi-brand retail in products that can be fully manufactured in and sourced from India."

Subhayan Chakraborty  |  New Delhi 

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Representative image

After being put on the back burner for more than a year and half, the debate over allowing easier Foreign Direct Investment (FDI) norms for trading has again started.

"In line with 100% FDI in food retail, a similar policy could be considered for multi-brand retail in products that can be fully manufactured in and sourced from India," the Federation of Indian Chambers of Commerce and Industry, told Finance Minister this week.

Although the current FDI policy permits overseas players to hold 51 per cent stake in an Indian multi-brand retail company, the BJP in its election manifesto had opposed overseas investment in the retail segment. In her earlier stint as Commerce Minister, Sitharaman had said trading cannot happen before farmers and retailers are provided enough resources to face market competition.

Traders bodies remain unilaterally opposed against any move to further liberalize the retail sector for FDI. Last year, the Federation of All India Vyapar Mandal had slammed industry body Confederation of Indian Industry for bringing up the same proposition.

In June this year, the government had allowed 100 per cent FDI under government approval route for trading, including through e-commerce, with respect to food products manufactured in the country. Food Processing Minister Harsimrat Kaur Badal has batted for a food plus category whereby certain items would be allowed to be retailed along with food. "Margins in food retail remain slim and the established model in other markets remain food along with other products. We need to incentivise investors to come in move in " Badal had told Business Standard last week.

But the idea has consistently been opposed by both the Commerce and Finance Ministries.

So far, only one foreign player, Tesco, has received approval for opening stores under the multi-brand retail policy. The previous UPA government had cleared the proposal.

has also suggested increasing FDI cap from 49 per cent to 74 per cent in the insurance sector, with changes to the clause pertaining to Indian management and control.

First Published: Fri, June 14 2019. 14:06 IST