The committee constituted to examine whether or not to allow foreign direct investment (FDI) in multi-brand retail is expected to come out with its report within two weeks.
Besides the consumer affairs and public distribution ministry, the inter-ministerial committee has representatives from the Department of Industrial Policy and Promotion (Dipp) — under the Ministry of Commerce and Industry — finance ministry and agriculture ministry. According to existing policy, FDI up to 100 per cent is allowed in wholesale or cash-and-carry trading.
After examining the feedback from all stakeholders, Dipp would examine the report, which would then be presented before the Cabinet to be pronounced into a policy, Dipp officials told Business Standard.
The government is apprehensive of a major political uproar with the release of the report and hence the departments will be careful. The Ministry of Finance has not taken any official stance on the discussion paper yet.
The Ministry of Consumer Affairs and Public Distribution has suggested a threshold of 49 per cent for FDI. The micro, small and medium enterprises (MSME) ministry has said the government should limit FDI in multi-brand retail to 18 per cent. The Ministry of Communications and Information Technology has said liberalising the sector would spell doom for manufacturers of electronic goods.
In July, Dipp had issued a discussion paper on whether FDI should be allowed in the retail sector. However, the committee was formed in August to examine the various feedback received from the industry and other bodies. The discussion paper, which has sought views from various stakeholders, including consumers, farmers, producers and manufacturers and modern retailers, has dealt with various aspects ranging from regulatory conditions, role of the state governments, enhancement of the public distribution system, protection of farmers and procurement issues, among others.
Global retail juggernauts like Carrefour, Walmart and METRO Cash & Carry have asked for a gradual opening of the sector to penetrate the Indian market in a calibrated manner. According to industry chambers such as Ficci and CII, the FDI cap should be opened up within the range of 49-51 per cent with certain stringent conditions in terms of a specific lock-in period and target for exports.
