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Consumer Affairs Ministry Gives Green Signal to 49% FDI in Multi Brand Retail 30/08/2010
The Consumer Affairs Ministry has given the green signal to allow 49 per cent FDI in multi-brand retail. It has written a letter to this effect to the Commerce Ministry. India currently allows 100 per cent FDI in cash-and-carry operation and 51 per cent in single-brand retailing. Foreign investors are barred from investing in multi-brand retail. Additionally, the Ministry also sought that a model law be first put in place at the State-level to protect mom-and-pop stores from the impact of the ‘Big Boys’ of retail.

“Multi-brand retail should be permitted with a cap of 49 per cent. A significant chunk of investments should be spent on back-end infrastructure, besides logistics and agro-processing,” the Consumer Affairs Ministry had said in response to the discussion paper floated by the Department of Industrial Policy and Promotion in June on allowing 100 per cent FDI in multi-brand retail.

A senior government official said the Consumer Affairs Ministry has sought the enactment of the National Shopping Mall Regulation Act to regulate the fiscal and social aspects of the retail sector, besides allowing mom-and-pop stores to become franchises of multi-brand retailers. “This will help grow not just the business but also in setting up back-end infrastructure which is much needed for the evolution of the retail sector,” the official added.

According to an ICRIER study, commissioned by the Commerce Ministry in 2007, “the retail business, in India, is estimated to grow at 13 per cent each year from $322 billion in 2006-07 to $590 billion in 2011-12. The unorganised retail sector is expected to grow at about 10 per cent a year from $309 billion 2006-07 to $496 billion in 2011-12.”
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