26% FDI may be allowed in retail

The government is expected to firm up its policy on allowing foreign direct investment in the retail sector in next two months. There is a plan to allow 26 per cent FDI in the stand alone and branded retail.

"We are in talks with various players in the retail sector. Our policy would be to open up the sector in such a way that incremental FDI comes in, without displacing the existing investment," Commerce Minister Kamal Nath told reporters at the sidelines of the Indo-US partnership in infrastructure organised by Indo-American Chambers of Commerce.

Even as Nath, in his speech, called for greater foreign direct investment in infrastructure, the response from US firms attending the conference was lukewarm.

Highlighting an underlying wariness of the government policies in India, the US participants like Louis Berger Group and Arcadis which made their presentations indicated interest only in providing consultancy services and advise on technological know-how.

"There is no dearth of funds, but the procedures have to be carried in transparent and speedy manner," Sanjay Ramabhadran Business Practice Manager of Arcadis in Houston said.

He also emphasised that there was a need for a change in the mindset, where the consumers were willing to pay for using roads and water facilities that are being provided free.

The Indian firms, too, complained of procedural hassles creating delays. For instance, V P Ravi, vice-president of International Sea Ports Ltd, which is operating the Dhamra Port said that even after the initial agreement with the Gujarat Government to develop the port was signed in 1998, it took almost five years for the project to come through.

"During this time many of the foreign companies that had initially shown interest in being partner to the project withdrew," he added.

The vice-president of Mundra Special Economic Zone Ltd, Arvind Kumar Sagar also lamented on the delay in the SEZ policy holding back their project despite all requisite infrastructure in place.

The concerns raised in the ports sector related to lack of a comprehensive regulatory regime, for resolving various disputes and keeping a check on charges levied by various shipping agents and minor ports that was not under the jurisdiction of the Tariff Authority for Major Ports.

The road sector players, on the other hand, raised issues of proper pre-qualification of bidders, non-availability of long-term funds for building roads and better communication between contractors and the authorities.