India to open up food retailing for FDI

By agencies   |   Thursday, 22 September 2005, 07:00 Hrs
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NEW DELHI: India will open its massive food-retailing sector ahead of retailing and a proposal is expected to go before the union cabinet next month.

The government said that by opening the food retail sector, farmers and the food processing industry would benefit along with the supply chain.

To begin with, the government might allow up to 26 percent FDI for first two years and later increase it 49 percent and then to 74 percent after three years depending on the success.

Kamal Nath, Commerce Minister had on Monday said the Government was readying a discussion paper on the issue. However the government is worried about the left parties who are opposed to any kind of opening of the retail sector.

ICRIER, an economic think tank, hired by the Consumer Affairs Ministry had suggested the government to permit FDI of up to 49 percent in a phased manner.

It also said that the retail sector, which contributed 10 percent of country's GDP was highly fragmented and suggested a 3-5 year time frame for complete opening to give domestic retailers enough time to adjust to changes.

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