Phased opening of FDI in multi-brand retail favoured

“A total of 94 proposals have been received till May, 2010, of which 57 were approved”

The Economic Survey 2010-11 has favoured phased opening of foreign direct investment (FDI) in multi-brand retail to address the concerns of consumers, farmers and declining FDI inflows.

According to the Survey, projects worth Rs. 24,143 crore are expected to be completed adding a capacity of 168.60 lakh sq. ft.

“Permitting FDI in multi-brand retail in a phased manner beginning with metros and incentivising the existing retail shops to modernise could help address the concerns of farmers and consumers,'' the survey says. At present India allows 100 per cent FDI in cash and carry wholesale trading, while it is prohibited in multi-brand retail. Up to 51 per cent FDI has been allowed in single-brand retail since 2006.

The survey says FDI in retail may also help bring in technical know-how to set up efficient supply chains which could act as models of development. According to it, during April 2006 to March 2010, India witnessed FDI inflows worth $194.69 million in the retail sector, accounting for 0.21 per cent of total FDI inflows into the country during the period.

“A total of 94 proposals have been received till May, 2010, of which 57 were approved,'' the survey said. Global retail giants such as Walmart, Carrefour and Tesco have been pitching for opening FDI in multi-brand retail so that they can tap the immense potential this country offers.

Globally, FDI in retail is permitted in countries such as Brazil, Argentina, Singapore, Indonesia, China and Thailand without any limit on equity participation, while Malaysia has equity caps.

On new projects, the survey says projects worth Rs.24,143 crore are expected to be completed adding a capacity of 168.60 lakh sq. ft, during 2011-12.

For the year ending March, 2011, projects worth Rs.8,281 crore are expected to be completed, adding a retail space of 115.10 lakh sq. ft., it adds. The survey, however, points out the limitations in the regulation of the sector due to lack of a national framework.

In India, retail trade is a State subject. There is no national framework for its regulation and development and States have there own regulations.