Foreign equity for multi-brand retail in select areas

Tuesday, 26 December 2006, 06:00 Hrs
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New Delhi:The Indian government is examining a proposal to permit foreign equity in the multi-brand retail trade segment in specific areas, senior officials in the commerce ministry said on Tuesday.

"We are examining the issue of allowing foreign direct investment (FDI) in retail trade even for multiple brands in areas such as stationary, sports goods and accessories, electronics and building material," a senior official said.

"The idea of not allowing FDI in multi-brand retail was to protect the interests of neighborhood mom-and pops shops. But how will they be affected in areas like electronics or sports goods or building material where there are no such traditional 'kirana' stores?" the official, who spoke only on condition of anonymity, asked.

"Of course, we will discuss the issue with stakeholders and a cabinet note will be prepared early next year for discussions. Opinion has also been sought from the National Manufacturing Competitiveness Council," the official added.

According to the senior official, Prime Minister Manmohan Singh was not averse to it but wanted the issue to be discussed in the cabinet and among alliance partners.

The government currently permits up to 51 percent foreign equity in single-brand retailing. As a result, global retail trade giants such as Wal-Mart, Tesco, J.C. Penny and Carrefour are denied entry into the Indian market.

"We have to get used to our own growth. We also need to have more confidence in ourselves and that may, sometimes, need a change of old mindsets," the commerce ministry official said.

According to officials, the government has already initiated steps to examine policy reforms in areas like financial services, retail, aviation, entertainment, mining and real estate after it receives a report from the competitiveness council.

"We are yet to decide whether all these will be taken up together, or on a case-by-case basis. Relevant ministries are also being consulted," an official added.

The current size of the India's retail industry has been estimated at $202 billion by global consultants A.T. Kearney with a potential for 30 percent annual growth for the next five years.
Source: IANS
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