FDI in India’s Multi-Brand Retail

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Jul. 26 – India’s Committee of Secretaries (CoS) voiced its approval for 51 percent FDI in multi-brand retail and the nodal Department of Industrial Policy and Promotion (DIPP) is expected to prepare a Cabinet proposal on this subject matter. The Cabinet Secretary has asked the DIPP to proceed rapidly on the issue and act fast for Cabinet approval, but clearance depends primarily on the recommendations of the CoS.

According to the long-awaited proposal, overseas retail giants such as Wal-Mart, Carrefour and Tesco would be allowed to own as much as a 51 percent of stores if they invest a minimum US$100 million. Although the multi-brand retail proposal does not need parliamentary approval, it would need a broad-based political approval.

Opposition parties may attack the government, accusing it of harming the interests of small kirana shops which are the back-bone of the economy. The CoS also recommended that FDI should be permitted only in 36 large cities with populations of over 1 million. India has already permitted foreign direct investment of up to 51 percent in single brand retail and 100 percent in the cash-and-carry format of the business.

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