Stockholm: India is unlikely to allow
foreign investment in multibrand retail at least in the next
couple of years, a top industry ministry official said.
"It`s a sensitive sector. I don`t see it happening
... certainly not in one or two years," Department of
Industrial Policy and Promotion Joint Secretary Gopal Krishna
said during his interaction with Swedish industry captains.
India does not allow foreign investment in multi-brand
retail, although it does permit 51 percent foreign direct
investment (FDI) in single brand segment.
World`s biggest furniture retailer IKEA of Sweden
recently dropped its USD 1 billion investment plan to set up
single-brand retail outlets in India after New Delhi showed no
inclination to allow FDI beyond 51 percent in that segment.
"Retail is the second largest employer in India and there
is a fear that opening up the sector for foreign direct
investment will bring in extreme form of competition and the
fears are not unfounded," Krishna said.
Commerce and Industry Minister Anand Sharma along with
officials from his ministry were in the Nordic country for a
two-day visit. They were accompanied by Indian industrialists
led by the Confederation of Indian Industry.
"We have no social security net," he argued. However, he
said 90 percent of sectors are open including the entire
manufacturing sector with the exception of defence. DIPP is
the nodal point for FDI guidelines.
A Parliamentary Standing Committee has recommended a
blanket ban on foreign investment in retail and has opposed
even big domestic corporate entering the sector saying that
it will lead to unemployment.
The committee, headed by Murli Manohar Joshi, feels that
"opening of FDI in retail trade by allowing single brand
foreign firms in India will result in unemployment due to
slide-down of indigenous retail traders.
Further, Krishna said the insurance bill which awaits the
report of the Parliament Standing Committee is likely to be
taken up by the government in the next six months. The bill
aims to raise the FDI cap to 49 from 26 percent.
Besides, he is hopeful that the RBI will relook into the
roadmap for the private foreign banks, which was put on hold,
charting out their entry and revisiting many restrictions such
as acquisition and opening new branches.