Allow FDI in multi-brand retail: Survey

Allow FDI in multi-brand retail: SurveyThe Economic Survey 2008-09, tabled in parliament on July 2, pitches for foreign direct investment (FDI) in multi-brand retail this year, enabling retail sector to raise funds from foreign market. The Indian retail sector, hit by weak demand, tight credit situation and unhealthy cost structures, is allowed for 51% FDI in single brand retail as per current norms.

Indian norms allow 100% FDI in wholesale cash & carry model but political opposition and some local factors forced the government to keep out FDI in multi-brand retail. A recent parliamentary standing committee report has opposed foreign investment in retail sector.

The survey maintains, "FDI in multi-format retail, starting with food retail. A condition could be put that it must have (for 5 years say) wholesale outlets where small unorganized retailers can also purchase items (to facilitate transition)."

Pinakiranjan Mishra, partner and industry leader, Ernst & Young said that FDI in food sector should be opened as it would have positive impact on farmers / producers as well as consumers. He said, "This would be good news for large foreign retailers who have entered India with the cash & carry model and plan to get into retail."