The government is planning to set up a committee to consider opening of the multi-brand retail trading business to foreign companies.
The move comes even as it is in the proces of collating feedback on a discussion paper issued by it on the subject.
While talks to set up the committee are still preliminary, senior officials in the Department of Industrial Policy and Promotion (DIPP) told Business Standard it would be constituted under the Ministry of Consumer Affairs and Public Distribution.
“The committee will be chaired by a senior official from the Department of Consumer Affairs, with representatives from various ministries as members. They will give due weightage to the feedback so that a consensus can be arrived at, which will primarily push the government’s objective in formulating a policy. It will examine the responses and will take a view on the recommendations,” said an official, who did not wish to be identified.
The committee will be given a month to come up with a recommendation before DIPP refers the proposal to the Cabinet Committee on Economic Affairs. Besides people from the ministry of commerce and industry, and consumer affairs, the committee will also have representatives from the ministries of finance, agriculture and food processing industries as members.
At present, foreign companies can operate the single-brand retail format or in the wholesale cash-and-carry business.
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The 21-page discussion paper on FDI in multibrand retail, floated by DIPP in early July, has already got a plethora of feedback from numerous global and domestic retail conglomerates, industry bodies, NGOs and farmers associations.
Gradual opening
Global retail juggernauts like Carrefour, Walmart and METRO Cash & Carry have asked for a gradual opening of the sector. “Recognising the government's stand to adopt a calibrated approach, we would endorse a position where, as a first step, multi-brand retail is opened up at 49 per cent. Should the government pursue this option, there should be a clear path towards 100 per cent FDI in the near future,” Bharti Walmart Managing Director and CEO Raj Jain said in his response to the discussion paper.
Similarly, according to French retailer Carrefour, foreign retailers should be allowed to make investment up to 51 per cent, with rights to manage the company to “bring about efficiency in the operations and induct the best industry practices”.
Pantaloon Retail (India) has asked the government to make a clear distinction between food and non-food categories within the format of organised retail.
According to industry chambers such as Ficci and CII, the FDI cap should be opened within the range of 49-51 per cent, with certain stringent conditions in terms of a specific lock-in period and target for exports.
Foreign retailers will be enthused to make quantum investments in the sector only if they have the flexibility to make these investments as they deem fit in line with their global operating models, said Deloitte India.
However, some other entities such as Kisan Jagriti Manch, Bharatiya Mazdoor Sangh and Swadeshi Jagran Manch, among others have strongly objected to this. They have stated the move would dislocate millions in the unorganised sector, thereby adversely affecting the vulnerable sections of the society and wiping out livelihood of many.
The discussion paper, which has sought views from various stakeholders, including consumers, farmers, producers and manufacturers and modern retailers, has dealt with various aspects — regulatory conditions, role of state governments, enhancement of the public distribution system, protection of farmers and procurement issues, among others.