As the debate within the government over allowing direct investment in multi-brand retail heats up, the Consumer Affairs Ministry has recommended 49 percent FDI cap in the sensitive sector.
"Starting with 49 percent FDI in the sector would be a safe thing," a senior Consumer Affairs Ministry official was quoted by a news agency report recently.
However, the Department of Industrial Policy and Promotion (DIPP), which is piloting the proposal for the politically sensitive sector, is in favour of a majority stake (51 per cent) for foreign retail chains, with set-up conditions where as the Consumer Affairs Ministry wants a larger share of 75 per cent of multi-brand retail FDI to be invested in back-end supply chains.
Recently, Prime Minister Manmohan Singh had admitted that there is a "big debate about it" in government and Parliament. He added that without breaking present institutional barriers in the multi-brand retail sector, there is fear of food inflation.