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Strong case to revisit 'restrictive' FDI retail policy: Report

Press Trust of India  |  Mumbai 

Domestic ratings agency has said there is a "compelling case" to revisit the "restrictive" retail (FDI) policy as has not been able to get sizeable investments despite opportunities.

Citing examples of other emerging geographies to allay concerns, the agency said organised and can co-exist.

The multi-brand remains "most restrictive" to FDI, with a cap of 51 per cent ownership and guidelines relating to mandatory investments in back-end infrastructure and local sourcing norms, it said.

"There is a compelling case for the government to revisit its policy. The investment requirements of the sector are sizeable," its vice president and co-head for corporate sector ratings Kinjal Shah said.

According to data released by the Department of Industrial Policy and Promotion, received USD 1.4 billion in in the between 2000 and 2018, which is only 0.36 per cent of the overall inflows, it said.

The agency said a population of over 1.3 billion with favourable demographics and a rising middle class present a big opportunity for foreign retailers, who have actually evinced interest.

said "restrictive nature of the retail FDI policy" has curtailed the foreign retailers' operations.

Shah said there remains on-ground opposition for from local traders, who fear risk of being thwarted by the deep pockets and increased competition from foreign players.

Pitching for relaxation in inter-segmental restrictions for multi-brand retail, Shah also said needs to up the caps on foreign ownership in the segment.

There is limited domestic capital being invested in the sector and FDI flows can bridge capital deficit and remove the supply chain inefficiencies, Shah said.

Citing global experience to drive home the point of co-existence between organised and players, the agency said saw a spike in employment and number of traders since liberalising on foreign ownership in retail in 1992 and is witnessing traditional retailers holding on to

It can be noted that relaxations in foreign ownership is an extremely sensitive subject politically in the country which faces opposition from large segments.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, January 14 2019. 14:40 IST
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