Tesco, Walmart a step closer to Indian shores | india | Hindustan Times
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Tesco, Walmart a step closer to Indian shores

In a sign that the government is moving towards allowing global supermarkets, such as Walmart, Tesco and Carrefour, to set up deep-discount stores, a committee of secretaries on Friday approved the proposal to allow up to 51% foreign direct investment in multi-brand retail, but with a few conditions. HT reports. The gamechanger

india Updated: Jul 23, 2011 02:21 IST
HT Correspondent

In a sign that the government is moving towards allowing global supermarkets, such as Walmart, Tesco and Carrefour, to set up deep-discount stores, a committee of secretaries on Friday approved the proposal to allow up to 51% foreign direct investment in multi-brand retail, but with a few conditions.

One of the conditions is that at least half the investment should be made in back-end infrastructure, such as cold storage chains and warehouses. Plus, the minimum FDI in any such project should be $100 million (Rs 450 crore). http://www.hindustantimes.com/Images/HTEditImages/Images/23_07_pg1b.jpg

Next, the cabinet committee on economic affairs, headed by Prime Minister Manmohan Singh, would take up the matter before the policy being formally notified, a source, who did not wish to be identified, said.

According to the policy cleared by the panel headed by cabinet secretary Ajit Seth, the global retailers will have to file a statement of accounts with the Reserve Bank of India and the Foreign Investment Promotion Board, disclosing their back-end infrastructure investment.

Large deep-discount stores will be allowed to be set up only in cities with a population of more than 10 lakh. State governments will have the discretion of allowing or prohibiting the setting up of such stores in their territories.

The list of riders also said at least one-third of these stores' sales should be made to small retailers and they should source at least 30% of manufactured items from small and medium enterprises.

This condition is aimed at neutralising the criticism that organised retail will destroy the small traders.

At present, foreign direct investment is prohibited in multi-brand retail, but the government allows 51% investment in single brand retailing and 100% in wholesale cash-and-carry trade.