The debate on opening up foreign direct investment (FDI) in multi-brand retail has gathered steam with the finance ministry preferring not to offer any comments on the matter. The ministry has said it would reserve its comments for the inter-ministerial consultation.
The food and consumer affairs ministry is in favour of opening up FDI in multi-brand retail with a 49 per cent cap.
The Department of Industrial Policy and Promotion (DIPP) had floated a discussion paper last month making a strong pitch for opening up the retail sector to FDI that would allow international giants such as Wal-Mart, Tesco and Carrefour to set up mega stores in one of the world’s hottest growth economies.
The paper said FDI in retail may be an efficient means of addressing the concerns of farmers and consumers.
"In our view, comments on the paper from our side at this stage would be premature and would be warranted at the time of inter-ministerial consultations just prior to placing the draft policy for the consideration of the Cabinet or Cabinet Committee on Economic Affaris (CCEA)," the Department of Economic Affairs said in a communication to DIPP earlier this month.
The ministry of food, consumer affairs and public distribution, however, said FDI in multi-brand retail should be permitted with a cap of 49 per cent.
"This will help local enterprise to upgrade their technology and practices to face competition from MNCs," the food ministry said in its comments on the discussion paper.
It said that as much as 75 per cent FDI should be spent on back end infrastructure, logistics and agro-processing.
"Investment of FDI in working capital should not be allowed. An enterprise getting FDI should be directed to invest most of fresh capital in upgradation of technology, and the back-end chain," it said.