Cabinet to take up retail FDI proposal today

The Cabinet is slated to consider a proposal to allow 51% foreign direct investment (FDI) in multi-brand retail and remove any cap for single-brand retail on Thursday.

If all goes according to plan, global giants like Wal-Mart, Tesco and Carrefour would get to sell their wares to the public directly through joint ventures with Indian firms. They will then no longer be confined to the back-end and wholesale operations. Currently, no FDI is permitted in multi-brand retail whereas for single-brand retail, it is capped at 51%.

As per the Cabinet note on retail FDI, ministries of agriculture and food processing and the Planning Commission have supported complete opening up of the retail sector and pushed for 100% FDI in multi-brand retail. The department of consumer affairs has suggested 49% instead of 51% and the labour ministry has sought a regulator to keep a check on multinational retail giants resorting to predatory pricing.

The agriculture ministry has supported the mandatory 50% FDI in back-end infrastructure as one of the restrictions. But it has trashed other riders such as involving small traders in the supply chain, 50% employment reservation for rural youth and procurement by the government, saying these conditions would be difficult to implement.

While supporting the complete opening up of multi-brand retail, the Planning Commission mentioned that the government should not condone inefficiency in its own policies and should desist from exaggerating job losses on the arrival of MNCs in the retail sector.

The department of consumer affairs has mooted 49% FDI in mutli-brand retail, saying local retailers will then be able to compete with multinationals and improve their own processes.