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Updated: December 8, 2011 23:52 IST

Centre to notify 100% FDI in single-brand retail with riders

Special Correspondent
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A retail outlet in Khari Baoli market, New Delhi. Photo: V.V. Krishnan
The Hindu A retail outlet in Khari Baoli market, New Delhi. Photo: V.V. Krishnan

The Press Note indicating the change in the FDI limit is likely to be out by next week but could contain a few riders along with stringent conditions for granting approvals to such set ups.

The Centre is gearing up to notify 100 per cent foreign direct investment (FDI) in single-brand retail, putting behind the embarrassing saga of FDI in multi-brand retail.

The government is ready to come out with the requisite Press Note and guidelines for 100 per cent FDI in single-brand retail with some riders. The Union Cabinet had on November 24 approved the enhanced limit of single-brand retail to 100 per cent from 51 per cent, clearing the decks for brands like Marks & Spencer, Zara, Ikea, Gap and Armani to open and own showrooms in the country.

It is expected that the Press Note indicating the change in the FDI limit will be out by next week but could contain a few riders along with stringent conditions for granting approvals to such set ups. Foreign investors are already required to own the brand they intend to retail, the brand must be present in other countries and the retailer must source 30 per cent of the products to be retailed from small industries. The guidelines could make it clear that such a condition will not apply to high tech goods that small and medium scale industries cannot manufacture. However, officials said the 30 per cent limit in this case could be hiked to protect the interests of local small units.

The 51 per cent FDI in the single-brand retail sector had not been able to attract many big names as official records point that in the last three and half years only Rs.196-crore FDI had come in through this route. “We are now hopeful that the enhancement of 100 per cent limit will ensure that big names in single-brand will now seek to penetrate the huge potential of the Indian markets in various brands and segments, which will ensure a good flow of FDI into the country,'' a senior Commerce Ministry official said.

According to Minister of State for Commerce and Industry Jyotiraditya Scindia, more than half of the Rs.196 crore came in 2010-11.

The government has already put on hold the decision to allow 26 per cent FDI in the aviation sector. The issue of enhancing the limit in insurance and defence sectors from 26 per cent to 49 per cent is also hanging fire due to objections from various sections of the government.

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While India was sleeping for three decades, the Communist China awakened opening the market to foreign investment both in retail and manufacturing sectors. While even the Communists in China promote foregn investment, Communists in India discourage foreign investment in the name of patriotism and protectionism, for political reasons. The Foreign Direct Investment (FDI) has gone down 25% in democratic India in 2010 with a total FDI of $19.4 billion where as the FDI of Communist China has grown to an estimated $106 billion in 2011. India have a long way to go to catch up the unprecedented economic growth of China during the past three decades. The FDI is shy in India because of the bureaucracy, licensing, bribes, restrictions, controls, poor infra structure and politics.

from:  Davis K. Thanjan
Posted on: Dec 8, 2011 at 21:27 IST

30% of product which govt is considering to be retail from small
scale industry should be reserved for indian small scale
industry,which give impulse to this sector and people engage with it.

from:  aamir mehmood khan
Posted on: Dec 8, 2011 at 20:52 IST

MM Singh uder tremendous pressure from Obama.

from:  Sadasivan
Posted on: Dec 8, 2011 at 20:49 IST

It is most unfortunate that nobody has so far opposed this proposal.Is it absolutely necessary to alow them to setup shop here putting our local industry.It is a sad beginning.

from:  K.Sugavanam
Posted on: Dec 8, 2011 at 20:34 IST

GO Meet an American Mr.James. Thanks to American recession, he decides
to invest outside USA, and comes to India with a bag full of green
dollars, after he was assured by RBI and Commerce Secretary that
environment in India is very conductive for business. Please come,
give us your dollars, we convert it into rupees.
He (full of confidence) converts his dollars, at the rate of 1$=Rs.40
Now James roams in India, checks for land to open office, or factory.
But price of land is so high thanks to the black money, it doesn’t
make any sense buying a property.
He says ok, let me just ‘rent’ some readymade building and I’ll
starting a small-scale i-phone production company.

But the electricity shuts down at random, for hours and days.
James: ok, I’ll buy a diesel generator like every other industrialist
in this area. Again price of Diesel also increasing, Profit margin
shrinking.
Adding insult to the injury, his workers have gone on strike. Workers
are demanding pay-rise because of the ev

from:  DEEPAK
Posted on: Dec 8, 2011 at 20:27 IST
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