have a relook.”
A similar clause was present in the single-brand retail sector as well where the government allowed foreign firms to set up 100% subsidiaries against the earlier cap of 51%. However, when Swedish furniture maker Ikea, which was keen to invest in the country, pointed out the anomaly, the government amended the regulations. Thus, in single-brand, the “mandatory” 30% sourcing from SMEs has been changed to “preferably” and the clause on $1 million has been removed.
Asked why no foreign firm has shown interest in multi-brand retail when several have come forward in single-brand retail and two foreign airlines have expressed interest in aviation, Sharma said: “It was only in December that finality was reached in the Lok Sabha and the Rajya Sabha. Thereafter, there has been very enthusiastic response and interest. Now, business decisions have to be made by business people. We have allowed only 51%; so the big retailers were already sourcing up to $1 billion or £500 million sterling from India.”
“Now, they will come up with the business proposals. They met me in Davos – chairman of Tesco and chairman of Wal-Mart. In business decisions of this magnitude, we are talking of hundreds of millions of dollars and in some cases billions of dollars. They do take time. When they put together their whole proposal, things will move. What is important is that there has been a very firm reaffirmation by India through these policy decisions, complex and difficult as they were. We have a biding commitment to the reforms agenda to open up a welcoming environment for the foreign investors,” Sharma said.