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2010-11-10

Red flag over FDI in multi-brand retail

FDI cringes over government's decision of not allowing it to hover over multi brand retail

The micro, small and medium enterprises (MSME) ministry has said that the government should not allow more than 18% FDI in multi-brand retail while the communications & IT ministry has said that opening up of the sector would have an adverse impact on manufacturers of electronics.

While some departments like the Planning Commission feel that allowing FDI in retail will pave way for global giants like Wal-Mart to enter this segment will be beneficial to the Indian economy, these two are the first government arms to express reservations. The government is yet to take a call on allowing FDI in retail, commerce & industry minister Anand Sharma said on Tuesday while answering media queries on the sidelines of a conference here. The ministry’s views are likely to be considered carefully since the entire debate on opening up retail centers circles around the possible loss of small retailers’ livelihood which could be displaced by large retail chains. Capping FDI in multi-brand retail would make it unattractive, especially since earlier discussions had looked at either 49% or 51% FDI in this segment.

The minister who is in charge of DIPP had said on Monday that political consensus would be crucial for liberalising the FDI policy for retail as 50 million jobs in the small and medium retail sector were at stake. In a communication to DIPP, the MSME ministry has highlighted that the retail sector provided job opportunities to 33.1 million people, making it the second-largest employer in the country after agriculture. The ministry recommends sourcing of 40 per cent merchandise from small units. The IT department has urged the DIPP to consult industry associations representing the electronics segment before finalising its view on FDI in retail.

 

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