Govt may further simplify FDI norms in multi-brand retail

NEW DELHI: India may further simplify investment norms in multi-brand retail to woo foreign retailers who have stayed away from the sector that was thrown open nine months ago.

The government had issued clarifications on investment guidelines last week but they failed to enthuse domestic and foreign retailers.

After a review meeting on Sunday, commerce and industry minister Anand Sharma, who has promised to handhold investors, said the government may simplify investment guidelines in multi-brand retail.

India has allowed 51% foreign direct investment ( FDI) in multi-brand retail but is yet to receive an investment proposal.

"If there are any other issues they ( global investors) have in mind, the government is receptive to that and any if further clarity in the guidelines (are required, the ministry will clarify that) because the objective of the policy is to attract FDI," Sharma told reporters, a day before leaving on a 10-day tour of Helsinki, St Petersburg, Belfast and London where he is expected to address investors.

Sharma said that after the consultations, the government may come up with clarifications and simplification of guidelines, wherever required.

The minister's remark comes after his meeting with top officials on issues related to India's FDI policy, especially in multi-brand retail trade. A week earlier, clarifications issued by the department of industrial policy and promotion (DIPP) had failed to impress foreign investors. Sharma said he will chair a Retail Round Table involving CEOs of Indian companies and foreign investors on June 27 to seek views on implementation issues and to address their concerns, if any.

Any FDI proposal in multi-brand retail "will be fast-tracked and (we) will do handholding, wherever required, as we have done in the case of IKEA", he added. Last week, the DIPP had issued clarifications related to sourcing and back-end investment in the country's multi-brand retail FDI policy.

In an interview to ET a few days ago, Sharma had said that the policy is to attract investment and create new jobs, and not to add to the profitability of existing retailers. Retailers Walmart and Tesco have written to the government seeking relaxation on the sourcing front, which was put down in the clarification put up on DIPP's website.

Foreign retailers want agro sourcing to be a part of the minimum 30% sourcing from MSMEs. The DIPP, however, says the policy only allows processed products' sourcing form MSMEs. The department's clarifications also said that all front-end stores will be company owned and operated, which means, these chains cannot operate through the franchise route. "We will have to do some handholding for them, like in single-brand, in the form of a fast-track approval mechanism... If there is need for greater clarity, we shall do so (issue more clarifications)", the minister had said in the interview.

To boost inflows, Sharma said his ministry would move the Cabinet for further liberalisation in other sectors as well.