The government on Tuesday made a strong pitch for throwing open the retail sector to foreign direct investment (FDI) in a policy that would allow global giants such as Wal-Mart, Tesco and Carrefour to set up huge supermarkets in the country.
At present, FDI is not allowed in multi-brand retail amid opposition that it would hit small shopkeepers and neighbourhood stores. In a blueprint of sorts, the department of industrial policy and promotion (DIPP) said in a discussion paper that FDI in retail may help both farmers and consumers while suggesting safety clauses and a regulator to protect various interests.
“Opening FDI in retail could also assist in bringing technical know-how to set up efficient supply chains, which can act as models of development,” it said.
The government has sought the views of different stakeholders by July 31 on whether FDI in the sector should be permitted. It did not propose any specific cap for FDI in retail firms.
The government currently allows 51 per cent FDI in single brand retailing and 100 per cent in wholesale trade.
The paper suggested that the government could make it mandatory for 50 per cent of all foreign investment in retail to be invested in creation of back-end infrastructure, and reserve half of all jobs in the retail sector for rural youth.
The paper also suggested a law called Shopping Mall Regulation Act to protect small retailers and proposes a centrally administered agency to monitor compliance of rules.
At present only 5 per cent of the nearly $500 billion or about Rs 23 lakh crore of trade is in the organised sector.