Agriculture, defence and pharma will be the focus sectors

The UPA Government, in a major shift from its oft repeated ‘no discussion' stand, on Monday indicated its willingness to tread the ‘forbidden path,' stating that it was ready for public debate on the issue of allowing foreign direct investment (FDI) in the ‘politically sensitive' sectors such as agriculture, defence, pharmaceutical and multi-brand retail.

The Department of Industrial Policy and Promotion (DIPP), the nodal agency for framing FDI policies, will come out with six discussion papers in mid-May on overseas investment norms. This is in contrast to the UPA I regime, when it had shelved plans to throw open multi-brand retail owning to strong opposition by Left parties and small and medium traders.

Talking to reporters here, DIPP Secretary R. P. Singh said “all the issues will be covered in the discussion papers. We want to throw open the issues for public debate so that we can make some sort of movement on these issues.''

Under the present FDI policy, India allows 51 per cent FDI in single brand retail and 100 per cent in the cash-and-carry (wholesale) sector. However, many countries — including foreign chains — have been pressurising the government to throw open the multi-brand retail sector to FDI investment which, they claim, would bring the much needed competition and quality for the consumers. Interestingly, while trans-national companies like WalMart and Carrefour and Indian industry chambers are pitching for opening up of the multi-brand segment, a Parliamentary Standing Committee has proposed a ‘blanket ban' on the entry of corporates into the unorganised sector employing millions of people.

The DIPP discussion papers, which would be put in the public domain on May 12-13, would deal with sectors like retail, defence, pharmaceutical and agriculture. The DIPP would seek public comments on the concept papers, Mr. Singh said.

On pharmaceuticals, Mr. Singh said the department was not averse to FDI, but was demanding a review of the policy.

The government allows 100 per cent FDI in drugs and pharmaceuticals through the automatic route.

It had released a compendium of all the press notes issued on FDI policies as part of a drive to make things simple. The Western world, including the U.S. and the EU, is separately asking India to open its financial sector to FDI and also put in place a legislation to raise FDI in the insurance sector to 49 per cent from 26 per cent. FDI inflows in the first ten months of 2009-10 were $22.9 billion.

More In: Industry | Business