Plan panel urges clarity on foreign investment in retail

April 2nd, 2008 - 11:43 pm ICT by admin  

New Delhi, April 2 (IANS) The government should further clarify the vexed issue of allowing foreign investment in the retail trade, the Planning Commission said in a report Wednesday. Currently, India allows 51 percent foreign direct investment (FDI) in single-brand retail joint ventures and 100 percent in cash-and-carry wholesale trading. It has no provision of FDI in multi-brand retailing.

“Hundred percent equity is allowed for cash-and-carry wholesale trading but there is no dividing line between this activity and retail trading,” the report said.

“There is nothing to prevent the end use consumers to make wholesale purchases meant for their own consumption,” it added.

The report also highlighted the various ways in which FDI is allowed in India’s retail space - one such being the franchising model, which is allowed under the current law.

The foreign retail chains, which develop local supplies according to their standards, can also source the products from India, it argued.

“These arguments have not been enough to convince the opponents of FDI in retail and there is lack of consensus on the issue in the ruling coalition,” it said.

Permitting FDI in multi-brand retailing has been a major contentious issue with the government as it has faced widespread opposition on the issue from both large and small traders, farmers and hawkers.

Global retail major Wal-Mart has already announced joint ventures with Bharti Retail for cash-and-carry wholesale retail, while French retailer Carrefour is in final talks with its India partner to roll out its operations.

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