Govt starts talks on FDI in retail
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New Delhi: About opening multi-brand retail to foreign direct investment (FDI), the government has launched discussions between ministries. The department of industrial policy and promotion (DIPP), the government body responsible for framing foreign investment policy, has written to the finance ministry on the issue and is also in talks with the agriculture ministry about the pros and cons of the move, reports Rohini Singh from the Economic Times. "The move to open up retail is part of the government's strategy to plug gaps in the food supply chain and more importantly, help bring down the difference between farm-gate prices and retail prices," said a top DIPP official, adding that DIPP will soon circulate a discussion paper to build consensus on the issue. The government allows up to 51 percent foreign investment in single-brand retail, but has so far been skittish about opening up multi-brand retail. The rules allow foreign multi-brand retailers only through franchise agreements with local players. To address the concerns of retail FDI critics, the government is likely to insist that control remains in Indian hands. "The proposed cap will be decided after consultations with the agriculture ministry but it is likely to be at 49 percent,"said the official. Big retailers such as U.S.-based Wal-Mart and Germany's Metro AG that operate in the so-called cash-and-carry ventures in India have long been clamouring for opening up front-end retail.

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