India is likely to open up multi brand retail and financial sectors soon to foreign investment, said Rahul Khullar, commerce secretary, at an event hosted by the US-India business council on Wednesday.
"Expect something before the summer is out," Khullar said, without giving details.
According to senior officials, after the Assembly elections are over in April, the UPA would be in a better position to push through with these critical reforms. The first — multi-brand retail — will require an executive order, while the second — financial sector reform — would have to be come though legislative action.
Both these have been high on the list of US demands on the trade front, and senior US officials had expressed hope that one or both would come through during President Obama’s visit to India last November.
The government has expressed reluctance to open up the multi-brand retail sector to foreign direct investment (FDI), fearing loss to kirana stores. It allows FDI up to 51% in single brand retail. The Centre had also expressed wariness to open up its financial sector to foreign investments, fearing the adverse effect of exposure to the western economy.
But the government seems to have come around. It now wants to move, at least on financial reforms, as reflected in finance minister Pranab Mukherjee's plea to CEOs two weeks ago. "I want to increase the foreign investment limit in insurance to 49%. I request your support to build consensus."