Panel recommends 51 % FDI in multi-brand retail

A committee of 10 government secretaries yesterday approved opening up India's multi-brand retail sector to foreign direct investors, a major step towards opening the sector to allow the entry of foreign retail giants.

The committee recommended relaxing investment to allow foreign retail firms a majority stake of 51per cent in multi-brand retail businesses with a minimum investment  of $100 million to set up retail operations, and half of their total investment will have to be for developing back-end infrastructure.
 
However, they have been restricted to cities that have a population of over 1 million.

The move will benefit global retail giants like Wal-Mart, Carrefour, Tesco and Metro AG who have long chafed at what they see as the restrictive though fast-growing Rs2.6-lakh crore unorganised Indian retail sector.

So far foreign multi-brand retailers have been allowed into wholesaling and not directly to consumers. However, 100 per cent FDI is the cash-and-carry wholesaling that enables them to supply to small retailers, restaurants and hotels.

Single-brand retailers are however permitted, which has allowed luxury branded product makers like Marks & Spencer to set up operations in the country.

The panel is believed to have rejected a proposal that foreign multi-brand operators should be made to sell at least 30 per cent of their goods to small retailers.