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Friday, 25 June 2010 |
 India has said it will go for calibrated FDI liberalization in sectors like defence and retail amidst the US demand for opening different segments for foreign investors. This was stated by commerce and industry minister Anand Sharma,
at the Indo-US CEOs Forum. He said, India was for defence and retail trade calibrated foreign investment liberalization on account of domestic sensitivities. He further pointed out that government's initiatives like simplification and consolidation of the FDI policy would go a long way in improving business environment in India.
 It may be noted that FDI is not allowed in multi-brand retail, which is dominated by the high street and neighborhood stores. In fact, it is a politically-sensitive topic in the country. Within the country, there have been protests by trading associations and other stakeholders against allowing FDI in retailing. In spite of the recent developments in retailing and its immense contribution to the economy, retailing continues to be the least evolved industries and the growth of organized retailing in India has been much slower as compared to rest of the world.
The growing market has attracted foreign investors and India has been portrayed as an important investment destination for the global retail chains. Foreign players are permitted in wholesale trade as also in single-brand retail. However, they want a bigger pie of the retail segment and want to invest in multi-brand retail. For example, US retail giant Wal-Mart has been lobbying with the Indian and US governments to persuade India to relax the rules prohibiting foreign investment in consumer-facing multi-brand retail channels. Wal-Mart’s presence in India as of now has been limited to business-to-business wholesale market and back-end supply chain management business via a joint venture with the Indian retailer Bharti Group. Wal-Mart has been trying unsuccessfully, for a number of years, to enter the Indian retail market but has been hindered by the Indian FDI regulations that do not allow multi-brand FDI in the retail sector which is Wal-Mart’s specialty. The US too has been pushing India to ease FDI caps in sectors like retail. |
