Govt defers decision on FDI in retail

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SummaryInter-ministerial wrangles have caused the crucial decision on retail FDI to be postponed.

Decision on much-awaited FDI in multi-brand retail is likely to be delayed further in wake of fresh inter-ministerial differences on the politically sensitive issue.

Differences between the Ministry of Consumer Affairs and the Department of Industrial Policy and Promotion surfaced, even as Wal-Mart said today it is waiting for a policy clearance to pump in investment in the sector.

"There are some differences among ministries over FDI in multi-brand retail. Our Department is processing what stand we have to take," Food and Consumer Affairs Minister K V Thomas said on the sidelines of a CII event here.

He said his ministry would formulate, within a week, stand on the terms and conditions which should be enforced for allowing the foreign direct investment (FDI) in the multi-brand retail, estimated at over USD 500 billion market.

"The question is not about the percentage of FDI only. There are large number of small shops in villages...," he said.

En route his return from the US, Prime Minister Manmohan Singh had also expressed concern about protecting the small traders.

"It is our task to go about it in a manner, in which the nation enjoys the benefits of more FDI in retail trade, without hurting our domestic interests. I can assure that we will do nothing which will hurt the essential interests of the small Indian trade community," Singh had said yesterday.

Wal-Mart India President, Raj Jain, who was also present at the CII meeting, said, "There would be manifold increase in investment (by us) if FDI in multi brand retail is opened up,"

At present, world's largest retailer operates in India through a cash and carry model. Though 100 per cent FDI is permitted in this format, Walmart has a joint venture with Bharti Enterprises for nine wholesale stores in the country.

The Food Minister said the multi-national companies are interested for business in cities alone."Who will look after interest of small shop keepers in remote villages? They should be properly protected," Thomas asked.

He said in his recent meeting with traders in Mumbai, a concern was raised about some big companies stocking food material which could trigger price increase.

The Committee of Secretaries (CoS) headed by Cabinet Secretary Ajit Kumar Seth has recommended that 51 per cent FDI could be allowed in multi-brand retail, which is dominated by neighbourhood kirana stores.

It also suggested that at least 50 per cent of the investment and jobs should go to rural areas. Global players will have

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