FDI can now invest up to 51% in retail sector

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FDI can now invest up to 51% in retail sector
Inflation being concerned, government cleared the way for Foreign Direct Investment (FDI) to the extent of 51% in multi-brand retail, with at least half the funds invested in infrastructure such as cold storage, newspapers reported on Friday, June 10, 2011.

As of now, India allows 51 percent FDI in single-brand retail and 100 percent in wholesale cash-and-carry operations.

An inter-ministerial group headed by Kaushik Basu, chief economic adviser in the finance ministry, has recommended allowing foreign direct investment in multi-brand retail to tame inflation and cut farm gate and retail price differences.

Strong signal given by him that prolonged pending issues for years and strong political opposition faced by foreign investors may get solved now by opening up the USD 450 billion retail sector to foreign investment.

Currently, Indian retail sector is restricted and highly dominated by small-scale traditional retail outlets, but government's this decision may provide new opportunities for global retailers such as Wal-Mart Stores, Carrefour, Tesco and Metro AG.

Further, India on Tuesday approved 16 foreign direct investment (FDI) proposals worth 9.24 billion rupees ($207 million).

The government has approved a proposal by L&T Finance Holdings, a unit of the country's largest engineering and construction firm Larsen & Toubro, to raise 4 billion rupees in a placement of shares prior to its initial public offering (IPO).

Government data reflects, India received $3.4 billion worth of FDI in the first quarter of this calendar year, relatively lower than the $5.1 billion it received last year same period.

OneIndia Money

Read more about: economy, government, retail, fdi
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