MSME ministry moots caution on foreign entry in retail

In a development out of step with the prevailing sentiment, two government departments have come out against the opening up of multi-brand retail to foreign direct investment (FDI).

According to analysts this could slow down the momentum generated during the US president Barrack Obama's stong push for greater trade ties.

The micro, small and medium enterprises (MSME) ministry has said that the government should limit FDI in multi-brand retail to  18 per cent while according to the communications and IT ministry, opening up of the sector would have an adverse impact on manufacturers of electronics.

While some departments like the Planning Commission feel that allowing FDI in retail would attract global giants like Wal-Mart to enter this segment, which would be beneficial to the Indian economy, the two are the first government arms to express reservations.

Commerce minister Anand Sharma had said yesterday that the government was yet to take a call on allowing FDI in retail, while on Monday, he had said that the government had a positive mindset on the issue, but would also weigh jobs generated by small vendors.

The finance ministry, though has not taken a position on the discussion paper floated by the department of industrial policy & promotion (DIPP), the nodal wing for FDI policy.