The National Democratic Alliance (NDA), which is opposed to foreign direct investment (FDI) in supermarkets and department stores, or so-called multi-brand retail, is considering allowing foreign portfolio investors to own even a majority stake in retail companies.
The move could attract significant investments to the country, given the size of its retail market ($518 billion according to audit and advisory firm Deloitte’s Indian arm; 8% of this is accounted for by so-called modern or organized retail) and the growth potential (the Indian retail market is expected to grow to $750-850 billion by 2015).
The move will also come as a boon to Indian retailers looking for investments as they negotiate the contours of a potentially lucrative but treacherous market.
“We’ve been anticipating this move for a while now. The clarification will give more options to foreign investors investing in India,” said Rakesh Biyani, a director at Mumbai-based retailer Future Group.
As part of its current discussions with various ministries, the department of industrial policy and promotion (DIPP), the nodal body that makes FDI policy, has proposed that the FDI ceiling of 51% in multi-brand retail trading be made a composite cap so that listed Indian supermarket chains can access foreign money from the capital market.
The inter-ministerial note has been floated by DIPP with approval from commerce and industry minister Nirmala Sitharaman.