PMEAC panel for capping FDI in multi-retail at 49%

Last Updated: Friday, August 17, 2012 - 19:13

New Delhi: In the face of apprehensions against FDI in multi-brand retail, Prime Minister's Economic Advisory Council (PMEAC) on Friday suggested that foreign investment in the sector be capped at 49 percent.

The Cabinet on November 24, had decided to allow 51 percent foreign direct investment (FDI) in multi-brand retail.

However, the decision could not be implemented following strong opposition from key UPA constituent Trinamool Congress and several chief ministers.

"Keeping in view the apprehensions against FDI in multi-brand retail, to begin with FDI up to 49 percent may be allowed in this sector," PMEAC, headed by C Rangarajan said, in its 'Economic Outlook for 2012-13'.

It said those states which are receptive to this idea may implement the decision. However, before coming out with the decision, its attractiveness may be ascertained with top international retailers and "it should be operationally so done that the announcement is met with investor announcements in favour of the same...".

The government announcement should be followed immediately by filing of applications, approvals and early kick-off in the states which are in favour of global retailers, it said.

It said that though the quantum of investment that may be forthcoming immediately "may not be large, permitting FDI in retail will help send the right signals on the commitment of the government to take the reform process forward".

PMEAC also called for FDI liberalisation in aviation sector.

The council said that the Indian aviation industry on Friday has established players.

"However, they need infusion of capital and technology to grow to the next level," it said adding foreign airlines should be allowed to pick up 49 percent stake in the domestic players.

Given the current difficulties of the domestic airlines, which have high costs on account of taxation applicable to aviation turbine fuel, maintenance, repair and overhaul, the immediate prospects for revival of the sector may depend on favourable consideration of concession on these by the Finance Ministry, it added.

Currently FDI up to 49 percent by FIIs and other overseas investors is allowed but foreign airlines are barred from investing in the Indian carriers.


First Published: Friday, August 17, 2012 - 19:13
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