Blog: Petah MarianIndia to ease retail restrictions by October?

Petah Marian | 6 June 2011

India's door "will be open to Tesco in four months", the country's commerce and industry minister Jyotiraditiya Scindia reportedly said over the weekend.

According to The Sunday Telegraph, the minster moved to reassure its trade partners that India remains an exciting investment and development destination and highlighted the huge potential for supermarket firms in India's underperforming agriculture sector.

The comments follows a government panel recommending the easing of rules over foreign investment in the country's retail sector.

An inter-ministerial group on inflation last week put forward the proposal as part of steps to temper inflation and cut down the margin between farmgate and retail prices.

At present, overseas retailers can own wholesale cash-and-carry chains outright but can only hold a 51% stake in single-brand outlets - like Nike stores. In a bid to protect local shop owners in India, foreign retailers cannot own multi-brand stores.

The relaxation of rules on foreign direct investment in India's retail sector has moved in fits and starts over the last few years, with foreign retailers like Wal-Mart and Tesco lobbying to move into the potentially lucrative market, while the country's lawmakers have wanted to protect its local retailers from an international invasion.

There has been much speculation in recent years over the future of FDI in the country, with talk it would be relaxed last year. However, for all the speculation and ministerial pronouncements, the relaxation of these rules remains simply talk.

 


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