Relaxation of FDI norms was vital, says Sharma

On the heels of the Indian government's further relaxation of rules for foreign direct investment in multi-brand retail as well as expanding FDI limits in a few key sectors, commerce and industries minister Anand Sharma sought to justify the move in interactions with the media.

Amid stagnant industrial growth and a slump in the value of the Indian rupee, Sharma told a TV news channel that the liberalisation was essential to bring in foreign investment, which is simply not forthcoming in the current eco-political scenario.

In another interview, he said the new policy is designed to solve four issues - job creation, infrastructure development, inclusion of farmers in the economy, and consumer interest.

''While India is the largest grain producer, infrastructure needed for post-harvest, storage and integrated cold chain is still a challenge. Second, it (the emended policy) has responded to farmers' needs by saving perishables like fruit and vegetables and offering them competitive prices.

''Moreover, not only will it create jobs but also safeguard consumers' interest by giving them more options and products to choose from,'' Sharma said in an interview to The Financial Express on Friday.

On Thursday, the government allowed foreign retailers to open stores in cities that have a population of less than one million. It also diluted the rule that 30 per cent of raw material must be sourced from small Indian enterprises.

To address another concern, the government said that at least 50 per cent of total FDI brought in the first tranche of $100 million will be invested in creating backend infrastructure within three years.

''We don't need to go to Parliament as there are no major changes. Our move is justified because we have given more clarity and flexibility,'' Sharma said.