FDI in multi-brand retail: Will 15-year journey end today?
The UPA's will to push through bold policy decisions will be put to test today when the cabinet takes up the contentious issue of allowing FDI in multibrand retail, with BJP and the Left opposing it vehemently.
But the move will bring in precious dollars at a time when the economy is slowing, food prices continue to gallop and the government is being accused of policy paralysis .
It has been a long, torturous journey, one that started when the United Front government led by H D Deve Gowda allowed 100% FDI in cash & carry wholesale trade in 1997. Some called it back-door entry for foreign players into India's retail sector. Nonetheless, it was a tentative baby step towards modernising retail business that led to allowing FDI of up to 51% in single brand retailing in January 2006.
Department of industrial policy and promotion moved a Cabinet note seeking an increase in the FDI cap. Earlier, it had proposed to increase the ceiling to 74%, but decided to adopt a more aggressive stand. It has argued that companies such as Ikea, which produces mass consumption products and accessories, and prominent luxury brands will set up stores if 100% FDI is permitted. Besides, it has made a case for the increase on the grounds that with full-control over the Indian venture, foreign retailers will have a sizeable presence in India and will be encouraged to source locally.
The Finance Ministry has has given its consent to the draft Cabinet note on opening the multi - brand retail to foreign investment.
Describing the move as against the interests of the country, BJP has threatened to launch nationwide agitations against the central government's move to allow foreign direct investment (FDI) in multi-brand retail.
Party leader and Public Accounts Committee chairman Murli Manohar Joshi said it would harm country's small businesses.
The decision on FDI in the sector has been delayed in view of concerns that it would adversely impact neighbourhood kirana shops, which account for over 90 per cent of $590 billion retail trade.
Several global retailers like Wal-Mart and Tesco are waiting in the wings to entry into India's multi-brand retail segment..
EDITORS PICK
- Wal-Mart to operate in India with majority stake
- Pantaloon seeks $400 mn Investment from Warburg
- Future Group to exit Generali JV, sell stake
- Realty Trends
The slowdown in big mall development would prompt a rejig in the expansion plans of global and desi lifestyle brands. - Will property prices come down now?
- How to adjust in cost effective small flats
- Noida to get 300 meters high building
- 4 factors before buying a residential property
- Mumbai apartment sold for Rs 53 crore
World largest retailers like Wal-Mart to operate in India with a majority stake
NEW DELHI: India's cabinet may decide by next week to allow chains such as the world's largest retailer Wal-Mart Stores Inc to operate in the country with a majority stake under strict local sourcing rules, a senior government source told Reuters.
A draft cabinet note suggesting so-called mult-brand retail foreign firms could hold up to 51 percent ownership has already been reviewed, a senior government source said on Friday.
"We have already sent it to the cabinet for their approval," the source said, adding that a decision could come next week.
Inadequate road, rail and storage facilities mean significant logistical hurdles and extra expense in moving farm and factory goods to Indian consumers, driving up prices nationwide.
Wholesale inflation in India has remained stubbornly high for more than a year and is now close to 10 percent despite 13 interest rate rises by the Reserve Bank of India (RBI) since March last year.
Small shop owners that account for more than 90 percent of India's $450 billion retail sector oppose the entry of foreign players, fearing that they will be put out of business.
India currently allows 51 percent foreign investment in single-brand retailers and 100 percent for wholesale operations, a policy that Wal-Mart and Carrefour among others have lobbied to change for years.
Another government source said the finance ministry had thrown its weight behind a second proposal to raise the cap on single-brand retail to 100 percent from 51 percent.
The cabinet note also stipulated businesses would have to source at least 30 percent of manufactured and processed goods from local small industries, the Business Standard newspaper reported on Saturday.
It also said the minimum amount a foreign retailer would have to invest was $100 million, at least half of which would go to "back-end" logistics and storage infrastructure.
Those conditions are in line with those first agreed by a group of senior civil servants in July.
An executive of UK retail giant Tesco Plc told Reuters on Monday the company plans to build on its existing tie-up with India's Tata Group to expand if foreign operators are allowed to invest in multi-brand retail.
Full coverage
Full coverage
EDITORS PICK
- Wal-Mart to operate in India with majority stake
- Pantaloon seeks $400 mn Investment from Warburg
- Future Group to exit Generali JV, sell stake
- Realty TrendsThe slowdown in big mall development would prompt a rejig in the expansion plans of global and desi lifestyle brands.
- Will property prices come down now?
- How to adjust in cost effective small flats
- Noida to get 300 meters high building
- 4 factors before buying a residential property
- Mumbai apartment sold for Rs 53 crore
World largest retailers like Wal-Mart to operate in India with a majority stake
NEW DELHI: India's cabinet may decide by next week to allow chains such as the world's largest retailer Wal-Mart Stores Inc to operate in the country with a majority stake under strict local sourcing rules, a senior government source told Reuters.
A draft cabinet note suggesting so-called mult-brand retail foreign firms could hold up to 51 percent ownership has already been reviewed, a senior government source said on Friday.
"We have already sent it to the cabinet for their approval," the source said, adding that a decision could come next week.
Inadequate road, rail and storage facilities mean significant logistical hurdles and extra expense in moving farm and factory goods to Indian consumers, driving up prices nationwide.
Wholesale inflation in India has remained stubbornly high for more than a year and is now close to 10 percent despite 13 interest rate rises by the Reserve Bank of India (RBI) since March last year.
Small shop owners that account for more than 90 percent of India's $450 billion retail sector oppose the entry of foreign players, fearing that they will be put out of business.
India currently allows 51 percent foreign investment in single-brand retailers and 100 percent for wholesale operations, a policy that Wal-Mart and Carrefour among others have lobbied to change for years.
Another government source said the finance ministry had thrown its weight behind a second proposal to raise the cap on single-brand retail to 100 percent from 51 percent.
The cabinet note also stipulated businesses would have to source at least 30 percent of manufactured and processed goods from local small industries, the Business Standard newspaper reported on Saturday.
It also said the minimum amount a foreign retailer would have to invest was $100 million, at least half of which would go to "back-end" logistics and storage infrastructure.
Those conditions are in line with those first agreed by a group of senior civil servants in July.
An executive of UK retail giant Tesco Plc told Reuters on Monday the company plans to build on its existing tie-up with India's Tata Group to expand if foreign operators are allowed to invest in multi-brand retail.Full coverage
Full coverage
Posts
No comments:
Post a Comment