FDI in multi brand retail to remain at 51% for now: minister
11 July 2019
India has so far received investment in multi-brand retail from one foreign company of United Kingdom. The present FDI policy in retail business allows up to 51 per cent foreign participation in multi brand retail trade and the government is not considering any proposal to increase FDI in multi brand retail sector in the country, minister of commerce and industry Piyush Goyal informed the Lok Sabha in a written reply on Wednesday.
The retail market sector depends on a number of factors, including FDI. However, FDI is largely a matter of private business decisions. FDI inflows depend on a host of factors such as availability of natural resource, market size, infrastructure, general investment climate as well as macro-economic stability and investment decision of foreign investors, the minister pointed out.
Under the Foreign Direct Investment (FDI) Policy, the details of norms for undertaking multi-brand retail trading in the country is given below:
FDI in multi brand retail trading, in all products will be permitted subject to the following conditions:
· Fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meat products, may be unbranded;
· Minimum amount to be brought in as FDI by the foreign investor would be $100 million;
· At least 50 per cent of total FDI brought in the first tranche of $100 million, shall be invested in 'back-end infrastructure' within three years, where ‘back-end infrastructure’ will include processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house and agriculture market produce infrastructure;
· At least 30 per cent of the value of procurement of manufactured/processed products purchased shall be sourced from Indian micro, small and medium industries, which have a total investment in plant and machinery not exceeding $2.00 million;.
· Self-certification by the company will be cross-checked to ensure compliance of the conditions as and when required. Accordingly, the investors shall maintain accounts, duly certified by statutory auditors;
· Retail sales outlets may be set up only in cities with a population of more than 1 million as per 2011 Census or any other cities as per the decision of the respective state governments, and may also cover an area of 10 km around the municipal/urban agglomeration limits of such cities;
· Government will have the first right to procurement of agricultural products.
The above policy is an enabling policy only and the state governments/union territories would be free to take their own decisions in regard to implementation of the policy. Therefore, retail sales outlets may be set up in those states/union territories which have agreed, or agree in future, to allow FDI in MBRT under this policy.
Retail trading, in any form, by means of e-commerce, would not be permissible, for companies with FDI, engaged in the activity of multi-brand retail trading.