India has decided to allow up to 100% foreign direct investment (FDI) in multi-brand retail for food products, a move aimed at reducing wastage, helping farm diversification and encouraging global giants to produce locally rather than importing items.
Finance minister Arun Jaitley announced this in the budget for 2016-17.
Food processing minister Harsimrat Kaur Badal had written to Prime Minister Narendra Modi in January asking the government to have a “relook at our FDI policy in multi-brand retail in food processing as a part of the Make in India initiative so that both farmers and consumers are benefitted and which will result in creation of critical infrastructure.”
India currently allows upto 51% FDI in multi-brand retail as part of policy notified by the previous UPA government.
The BJP has been persistent in its opposition to allowing foreign giants to set up deep discount stores in India arguing that such mega supermarkets will endanger the livelihood of millions of neighbourhood mom-and-pop stores and street vendors.
The party, which stormed to power at the Centre with a landslide victory in 2014, has not scrapped the existing policy although it has not actively encouraged FDI in multi-brand retail.
European mega chain Tesco, which set up a joint venture with the Tata group in 2013, is the only foreign multi-brand retail outfit operating in India.