India hopes for major Foreign Direct Investment (FDI) Reform in retail- 2011

India’s food processing minister Subodh Kant Sahai said he is hopeful of Asia’s third-largest economy opening up foreign direct investment in multi-brand retail in 2011. “It is very much on agenda,” Food Processing Minister Subodh Kant Sahai told reporters, referring to opening up the retail sector. “Let’s see, by next year,” Sahai said, when asked about a timeframe.

India currently allows 51 per cent FDI in single-brand retail, but none in multi-brand. Recently, the government had initiated a discussion on opening FDI in multi-brand retail.

The government has also relaxed FDI norms thereby lifting restriction that required retailers to source products from FDI-backed group wholesale firms only for internal use.

Domestic traders lobby groups and the Left-wing political parties have expressed concern that transnational giants offering deep discount sales in mega stores would put the livelihood of neighbourhood mom-and-pop stores and street vendors at risk.

Wal-Mart Stores Inc. (WMT)
Chief Executive Officer Michael Duke said he is “optimistic” that overseas companies will be allowed to invest in India’s retail industry.

Wal-Mart Stores Inc.

Wal-Mart Stores Inc.

Wal-Mart Stores, Inc. (WMT), the world’s largest retailer, and rivals including Carrefour SA and Tesco Plc are pushing India’s government to allow foreign investment after the trade ministry invited views from the industry on removing the restriction. The government’s discussion paper said in July that allowing foreign investment in retail will lower prices and benefit farmers.

Pitching for 100% FDI in the Indian retail sector, US retail giant Walmart on Monday said such a move will help contain inflation.

“This will also enable Walmart to increase sourcing of products from India by developing more vendors here,” Walmart Stores president and CEO Mike T Duke said here.

“Hundred per cent FDI would be the solution for all constituents and stakeholders in the retail sector,” Duke said, maintaining that the retail giant respects India’s calibrated approach towards opening up the sector.

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Bettina Padurano

Executive editor at CEOWORLD Magazine
Bettina is an Executive editor who oversees CEOWORLD Magazine's Internet, lifestyle, education, technologies, and lists & rankings sections. Bettina graduated from Columbia University and holds a master's degree from Georgetown University's Graduate School of Journalism.(bpadurano@ceoworld.biz)
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About the Author
Bettina Padurano

Bettina is an Executive editor who oversees CEOWORLD Magazine's Internet, lifestyle, education, technologies, and lists & rankings sections. Bettina graduated from Columbia University and holds a master's degree from Georgetown University's Graduate School of Journalism. (bpadurano@ceoworld.biz)

Email: bpadurano@ceoworld.biz