FDI in multi-brand retail may start with 36 towns

The government is considering allowing foreign direct investment (FDI) in the multi-brand retail sector with riders and in a phased manner, two government officials in the know of the development said.

To begin with, the government may allow foreign direct investment in multi-brand retail only in 36 cities, which have a population of over 1 million, the officials said.

The government currently allows 51% foreign direct investment in single-brand retail, while in multi-brand, the issue has been hanging fire for several years now due to opposition from several quarters.

India allows 100% FDI in cash-and-carry operations.

There have been protests against plans to allow global retail chains to operate in the country on fear local ‘mom and pop stores’ and the unorganised sector vendors will be hit by their entry.

Allaying such fears, one of the government officials said: “Big retailers have space requirements, and with real estate prices being steep they will have to set up mostly outside densely populated cities.”

“Meanwhile, ‘kirana’ shops, known for their 24x7 customer relations, would continue as usual without being affected,” the official added.The officials also said that the government may also ask retailers to invest half their capital in setting up back-end operations, as required by the state governments.