Nath seeks view on FDI in retail

Commerce and Industry Minister Kamal Nath today asked Indian retailers to come up with suggestion for opening up the sector to foreign investment but asked them to bear in mind the implications of the move on small players, particularly in the unorganised sector.

"The sector is of tremendous interest to India within the services sphere but there are sensitivities involved in opening it up," said a senior commerce department official.

When contacted, Kishore Biyani, chairman, Pantaloon Retail, said the minister discussed ways to generate more employment in the sector without displacing the unorganised sector. Representatives from Trent Tata, ITC and Shopper's Stop also attended the meeting.

Real estate developers like the Hiranandani group were also part of the delegation that met Nath.

Nath had earlier proposed to open up the branded retail segment to foreign competition which would mean that players like Nokia and food chains can open their dedicated chains in the country but international retailers like WalMart and Metro AG cannot enter the country for purposes other than wholesale trading.

The Consumer Affairs Department, the nodal agency for the sector, is also working on the opening up and is awaiting a final set of recommendations from research agency Icrier before moving ahead with the proposal.

The department had commissioned the report for liberalising the sector to foreign investment.

Officials in the government are of the opinion that opening up the sector to foreign competition will not affect the small players and the delay was mainly on political grounds.

"Retailers are already coming into the country through the back door using loopholes in the rules," said an official. He added that the food chains were using the franchise route for entering the market while some retail chins had entered the country through the cash-and-carry segment.

"The sector has tremendous employment potential and the foreign players are not going to displace the local vendor selling grocery," said an official.