Government not to relax FDI policy in retail

The government is unlikely to take a more liberal stance on foreign direct investment (FDI) in the retail sector, something being favoured by most in the industry. The state minister for trade and industry Jyotiraditya Scindia said in Parliament that government was not looking to change the FDI norms in retail for now.

Presently India allows 51% FDI in single brand stores. It also allows 100% in wholesale cash and carry model, but has kept out FDI in multi-brand retail owing to political opposition as also that from mom and pop store operators. There is no consensus on the issue and a recent parliamentary standing committee report strongly opposed FDI in retail citing its ill effects on domestic businesses.

Retail industry however has been demanding allowing FDI into the multi-brand segment for sometime now. The government, however, maintains that big multinationals if allowed into the multi-brand segment, may pose substantial threat to domestic retailers, something that the government is not willing to concede.

Even the Economic Survey that the government presented before the Union Budget had great support to allow more liberal FDI ragime in sectors like retail. However, it will perhaps take some time before the government can bulid at least a workable support among the political circles to push the move.

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