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May 17, 2006

INDIA: Government yet to decide on FDI in retail sector

The Indian Government is yet to make a decision on whether to allow foreign direct investment (FDI) in the retail sector and is currently examining the impact that such a move would have on employment and domestic trade, it said in a statement.

The Indian Government is yet to make a decision on whether to allow foreign direct investment (FDI) in the retail sector and is currently examining the impact that such a move would have on employment and domestic trade, it said in a statement.

Earlier this year, Indian legislators decided to allow up to 51% foreign ownership of single-brand companies but are still blocking the entry of global retailers, such as Wal-Mart, into the market.

“The policy is expected to encourage economic activity, employment opportunities and investment in the sector. Since branded products cater to a market segment different from that catered to by small traders, FDI in single brand product retailing is not likely to affect them adversely,” Shri Kamal Nath, Union Minister of commerce & Industry said in a statement released yesterday.

The possibility of opening the retail sector has drawn staunch resistance from the Government’s political opponents, who argue that parliament should have been consulted before FDI in single-brands was permitted.

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