Government rules out FDI in retail sector for now

14 Mar 2008

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Mumbai: The government is not considering any proposal to allow foreign direct investment (FDI) in retail sector, agriculture minister Sharad Pawar said.

"There is no proposal to allow FDI in retail and government is not thinking of it because it wants to protect the interest of retailers," the minister told the Rajya Sabha during question hour.

He said the International Council for Research on International Economic Relations (ICRIER), which is undertaking a study on the likely impact of organised retailing on the unorganised sector, will submit its report by end-May.

The study would cover "effect of organised retailing on small retailers and vendors in the unorganised sector keeping in mid the likely growth in the overall market and effect on employment," he added.

The study, commissioned in March 2007 and expected to make a report available by July 2007, had since been reschedule to enable additional survey, he said.

Pawar said the regulation of retailing falls under the jurisdiction of the state governments, which can allow or disallow setting up of retail establishments.

"The retailers/traders register their shops with concerned authorities in various states. At present, there is no restriction on the entry of any domestic investor into retail sector," he said.

He said 10-12 big corporate and industrial houses have evinced interest in organised retail.

The findings of the study would help government take a view on the need to have a policy on the issue, he added.

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