House panel recommends blanket ban on FDI in retail
A Parliamentary Committee has recommended a blanket ban on foreign investment in retail and flagged major concerns on the politically contentious issue that had triggered howls of protest from small retailers a few years ago. HT Correspondent reports.business Updated: Jun 08, 2009 23:33 IST
A Parliamentary Committee has recommended a blanket ban on foreign investment in retail and flagged major concerns on the politically contentious issue that had triggered howls of protest from small retailers a few years ago.
“A blanket ban should be imposed on domestic corporate heavyweights and foreign retailers from entering into retail trade in grocery, fruits and vegetables,” the Parliamentary Standing Committee on Commerce said in its report on Foreign Direct Investment (FDI) in Retail Sector.
The committee, headed by Murli Manohar Joshi, said opening FDI in retail by allowing single brand foreign firms would result in unemployment. It asked the government not to issue further licences for wholesale “cash-and-carry” business to both foreign and domestic investors.
At present, FDI is prohibited in multi-brand retailing, although upto 51 per cent FDI is allowed in single brand retail.
“With a stable and progressive government in place, we are optimistic that it will move ahead with its policies of inclusive growth and economic reforms. Retail can be an engine of growth, not just in urban India but also in Tier-2 and Tier-3 towns offering more job opportunities and helping families save money so they can live better and FDI in retail can only help accelerate this process,” Arti Singh, vice president, corporate affairs, Bharti Walmart told HT when asked to comment on the observations of the Parliamentary panel. Officials of Bharti Retail , a wholly owned subsidiary of Bharti Enterprises that separately runs a chain of multi-brand front-end retail stores `Easy Day’, were not available for comments.
The size of the retail industry, dominated by a large unorganised sector, is estimated at $356 billion and is growing at over 10 per cent per annum.
German major Metro, which had set up the first foreign wholesale cash-carry business in the country, could not be reached for comments.