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Commerce & Industry Minister, Anand Sharma today said his ministry would move the Cabinet for further liberalisation of Foreign Direct Investment (FDI).
Sharma told reporters here that he would chair a retail round table involving heads of Indian companies and foreign investors on June 27, to seek views on implementation issues and to address their concerns, if any. After the stakeholder consultation, an appropriate view would be taken on implementation-related aspects, he said. The meeting would particularly discuss FDI in multi-brand retail (MBRT).
Sharma hinted that telecom could see 100 per cent FDI against the present cap of 74 per cent and the FDI cap might be revised in defence. Before leaving for a 10-day visit from tomorrow to Helsinki,
St Petersburg, Belfast and London, Sharma said he would address all concerns of foreign retail sector investors and ensure help in setting up stores.
The government is likely to come up with clarifications and simplification of guidelines, whenever required, Sharma said. The department of industrial policy and promotion (DIPP) had, earlier this month, issued clarifications on MBRT policy, which added to the confusion. The clarifications introduced some new ideas that are being seen as a roadblock for foreign investors, as well as for domestic firms. Also, the department has left many issues hanging, to be considered later.
DIPP says the acquisition of existing retail stores will not be part of the mandatory $100-million investment. Front-end retail stores must be set up as an additionality and not through acquisition of existing stores. This will hurt companies like Walmart, which wants to acquire the existing stores of the Bharti group.
On the 30 per cent sourcing from the Indian micro, small and medium enterprises sector, the government has made it clear that these cannot be used for global business as well and global sourcing has to be kept separate. "The 30 per cent sourcing will be reckoned only with reference to front-end stores. A multi-brand retailing entity cannot engage in any other form of distribution."
Also, the sourcing condition pertains only to manufactured and processed products, DIPP has said. "Procurement of fresh produce is not covered by this condition." Chains like Walmart, Tesco and Carrefour are expected to have the bulk of their products in the fresh produce category.
Sharma reiterated that he strongly favoured raising the FDI cap in telecom as well as the defence sector.
Sharma said his ministry would move the Cabinet for further liberalisation in other sectors as well, which hold potential for FDI inflows.
"I am strongly in favour of raising the cap in the telecom sector. I have discussed this with the telecom and finance ministers and once we have the proposal, we will move the Cabinet for raising the cap to 100 per cent, and also for FDI in defence, because we want defence manufacturing to be here," he said.
He said his ministry wants global majors in the defence sector to partner with both, the public sector units and the private sector, to manufacture weapon systems in India. "Defence technologies have multiple applications, including industrial applications. We want the global majors to partner with Indian entities, so that the big outgo of foreign exchange could also be brought down and domestic manufacturing improves and jobs are created," he added.
On hiking the FDI cap in the defence sector, he said that he had written to the defence minister and would meet him on the matter. "He (the defence minister) has written back to me, suggesting that we will discuss this matter in a meeting," Sharma said.
Finance Minister P Chidambaram had last week said that he would meet Sharma after the Arvind Mayaram Committee submits report on Foreign Institutional Investors and FDI by Monday or Tuesday. He would also meet Prime Minister Manmohan Singh after that, Chidambaram had said.
He had said every sector and every cap would be reviewed. FDI inflows declined 38 per cent to $22 billion in 2012-13 against $35 billion in the previous financial year.
