Two Gov’t Departments Warn Against Opening Up Retail to FDI
Nov. 10 – Two government departments are warning against opening up multi-brand retail to foreign direct investment in an effort to slow momentum towards opening the sector following U.S. President Barack Obama’s visit to the country.
According to the Ministry of Micro, Small and Medium Enterprises, the government should not allow more than 18 percent FDI in multi-brand retail while the Ministry of Communications and Information Technology believes that opening up of the sector would have an adverse impact on manufacturers of electronics.
“India should tread cautiously by opening the sector, if at all, gradually and analyzing the impact before opening it more. In the beginning, FDI less than 18 percent may be thought of,” the Ministry of Micro, Small and Medium Enterprises said in a recent discussion paper.
The Indian Planning Commission feels that allowing FDI in retail, paving the way for global retail giants like Wal-Mart to enter the country, will be beneficial to the Indian economy.
The government has yet to decide whether to allow foreign investment in the retail sector Commerce and Industry Minister Anand Sharma said on Tuesday. On Monday, the minister had said that the government had a positive mindset on the issue, but would also weigh jobs generated by small vendors according to The Economic Times.
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