FDI in select retail segments may get nod
Sports goods, electronics and building equipment may be opened up with a cap of 51% FDI.
By TNN |
NEW DELHI: The government may open up foreign direct investment (FDI) in retail to areas where small domestic players do not operate. The department of industrial policy and promotion (DIPP) is preparing a detailed policy for further liberalisation of FDI in the country, which is likely to be announced before the Union Budget.
As part of the proposed move, the ministry has marked out sports goods, electronics and building equipment as some of the sectors that may be opened up with a cap of 51% FDI. Since there are hardly any small manufacturers and retailers which will be affected in these areas, the government is likely to allow FDI at both the front-end and back-end. The government is also considering to permit multi-brand retail in such areas.
“The country needs technology in both front-end and back-end. FDI is likely to bring this in,” commerce and industry minister Kamal Nath said. However, whether the government will allow FDI in these segments through the automatic route or through the Foreign Investment Promotion Board (FIPB) is yet to be decided, he added.
The government is likely to raise the matter with the Left parties before it takes the final call. The Left had initially stalled the government’s plans to allow FDI in retail in the multi-brand segment on the grounds that it will adversely affect mom-and-pop stores.
There is a need for production activity in areas such as building equipment, where only some domestic companies like Tisco and L&T are active. Most of the other equipment is imported. The demand for sports goods is also likely to go up with the country readying for the Commonwealth Games.
So far, the government permits 51% FDI in single-brand retail through FIPB. As far as multi-brand products are concerned, the government allows 100% FDI in cash-and-carry through the automatic route. A number of companies have entered the country in single-brand retail, but most of these are luxury brands like Louis Vuitton and Chanel.
As part of the proposed move, the ministry has marked out sports goods, electronics and building equipment as some of the sectors that may be opened up with a cap of 51% FDI. Since there are hardly any small manufacturers and retailers which will be affected in these areas, the government is likely to allow FDI at both the front-end and back-end. The government is also considering to permit multi-brand retail in such areas.
“The country needs technology in both front-end and back-end. FDI is likely to bring this in,” commerce and industry minister Kamal Nath said. However, whether the government will allow FDI in these segments through the automatic route or through the Foreign Investment Promotion Board (FIPB) is yet to be decided, he added.
The government is likely to raise the matter with the Left parties before it takes the final call. The Left had initially stalled the government’s plans to allow FDI in retail in the multi-brand segment on the grounds that it will adversely affect mom-and-pop stores.
There is a need for production activity in areas such as building equipment, where only some domestic companies like Tisco and L&T are active. Most of the other equipment is imported. The demand for sports goods is also likely to go up with the country readying for the Commonwealth Games.
So far, the government permits 51% FDI in single-brand retail through FIPB. As far as multi-brand products are concerned, the government allows 100% FDI in cash-and-carry through the automatic route. A number of companies have entered the country in single-brand retail, but most of these are luxury brands like Louis Vuitton and Chanel.
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