Planning commission deputy chairperson Montek Singh Ahluwalia on Monday made a strong pitch for easing foreign direct investment (FDI) norms in the politically-contentious insurance and multi-brand retail sectors.
“Removing FDI cap on insurance and multi-brand retail is very much on the government agenda and it is in the process of amending the insurance legislation to pave the way for allowing 49% FDI in the sector,” Ahluwalia said.
A parliamentary standing committee is examining the amendments in insurance legislation to increase the ceiling on FDI from the present 26%.
The department of industrial policy and promotion (DIPP) had floated a discussion paper in July favoured throwing open retail to FDI that would allow international giants such as Wal-Mart, Tesco and Carrefour to enter the country.
At present, FDI in multi-brand retail is prohibited in India. The government allows 51% FDI in single brand retailing and 100% in wholesale trade.
Domestic traders and Left parties are concerned that deep discount sales offered by international retail giants would impact the livelihood of neighbourhood retailers.
Ahluwalia felt that this argument, at a time when the economy is growing fast, is misplaced.