Govt appoints ICRIER for retail study

Response to Sonia's demand.

Following Congress President Sonia Gandhi's demand for a study to assess the impact of transnational retailers on domestic competitors, the commerce ministry has commissioned the Indian Council of Research in International Economic Relations (ICRIER) to undertake a "holistic" study in this regard.

Till such time as the study is complete, the plan to allow 51 per cent foreign direct investment (FDI) in speciality retail sectors such as consumer electronics and sports goods has been put on hold.

Commerce Minister Kamal Nath said the study would cover issues relating to both FDI and entry of large domestic chains in the country's retail business. It is likely to be completed in the next three to four months.

Nath said FDI in December 2006 grew nearly five-fold to $2.04 billion, against $0.35 billion in the corresponding month last year.

"This is the highest-ever FDI inflow in a single month," he added. Sectors receiving the most FDI included textiles, chemicals and business services.

Following Gandhi's letter in January, the Prime Minister's Office had directed the department of industrial policy and promotion (DIPP) under the commerce ministry to conduct an impact study in early February.

For the April-December 2006 period, FDI inflows stood at $9.3 billion, almost three times the $3.5 billion in the corresponding period last year.

The commerce ministry expects FDI inflows in 2006-07 to touch $12 billion, against $5.5 billion in 2005-06.

ICRIER had conducted a similar study for the government last year.