Planning Commission to push for action on FDI in multi-brand retail in 12th Plan

NEW DELHI: The Planning Commission will make a strong pitch for opening of foreign direct investment ( FDI) in the multi-brand retail, an issue put on hold because of political opposition, in the 12th Plan (2012-17).

The 12th Plan document, which will be placed before the full Planning Commission meeting on Saturday, has argued that early steps to liberalise FDI in retail will send right signals to investors, sources said.

"We must build on the success of previous liberalisation in FDI in other sectors, such as insurance, and before that telcom," they added.

Flow of overseas investment is also needed to deal with the problem of the rising Current Account Deficit (CAD) which has risen to 4 per cent in 2011-12 much beyond the acceptable level of 2.5 per cent.

Last year, the Union Cabinet approved 51 per cent FDI in multi-brand retail paving the way for global giants like Wal-Mart to open mega stores in cities with population of over one million.

However, following widespread opposition, including from its own allies, the government suspended its decision to allow 51 per cent foreign direct investment (FDI) in multi-brand retail on November 24, 2011.

Despite a setback on the politically-sensitive issue, the government has renewed its efforts to forge a consensus on opening the doors to global retailers in multi-brand retail, estimated to be a about USD 550 billion market.

The Department of Industrial Policy and Promotion has been holding consultations with state governments and stakeholders like farmers and consumer associations, to arrive at a broad consensus on this issue.