The government today said the changes in FDI policy will not allow back door entry for foreign investment into the retail sector or circumventing the rules.
"No, it is not this...," Commerce and Industry Minister Kamal Nath said when asked to comment on apprehensions, especially among the Left, that excluding indirect foreign investment in sectors with caps could lead to FDI crossing the ceilings.
India does not allow FDI in multi-brand retail but permits up to 51 per cent in single brand retail and 100 per cent in cash and carry wholesale trading.
Though there is a ban on FDI in big multi-brand retail stores, there is no restriction on companies like the Reliance and the Tatas to access the foreign equity market through the American and global depository receipts.
"Today we have big players here like the Tatas and the Reliance already in retail. They already have foreign holdings...They can borrow, they can issue debentures, that in any case is allowed...It is nothing new," Nath told reporters at the Hero Mindmine Summit-2009 here.
There is also no bar on the Indian firms engaged in the retail sector accessing money from the private equity players.
With changes in the FDI policy, the indirect foreign equity in an Indian investing company would not be counted as foreign stake allowing the caps (direct and indirect) to be circumvented.
However, Nath described the decision as harmonisation of rules. "At this point of time when there is a tightening in the global capital market we have to ensure that India becomes a good investment destination."
The minister also ruled out any tweaking in the FDI policy for the retail sector.
After maintaining robust inflows till September - with a monthly range of $2.5-3 billion, FDI in October slipped to $1.4 billion and further to $1.08 in November, according to official figures.
