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FDI in multi-brand retail in six cities
22 June 2011: The Union Government is likely to allow FDI in multi-brand retailing only in the six big metros.
The six metros in which FDI in multi-brand retailing will be permitted are Delhi, Mumbai, Kolkata, Chennai, Bangalore and Hyderabad. The decision in favour of a ‘calibrated’ liberalisation, keeping other cities out, is on account of political concerns regarding the impact of the opening up of multi-brand retailing to FDI on small retailers. The one million cut-off will lead to inclusion of cities such as Agra, Nashik, Faridabad, Dhanbad, Indore, Vizag, Kochi, Ludhiana, Rajkot, among others. They account for 11.5 per cent of India’s population according to the 2001 census.
While the move will further whittle down the policy, which already has several riders, it will enable a step by step approach to liberalising the sector. While FDI up to 51 per cent is proposed, state governments may get the power to decide if they want to allow foreign retailers to open front-end stores in their cities. The policy also says at least 50 per cent investment should be in back-end infrastructure. The minimum FDI suggested is Rs 450 crore. In India, 50 per cent FDI is allowed in single-brand retailing. FDI up to 100 per cent is allowed in wholesale cash-and-carry. Also, 30 per cent manufactured products should be outsourced from small and medium enterprises.
Source: Business Standard