NDA government contemplating 100 per cent FDI in multi-brand retail

The government is looking to lift a cap on foreign direct investment (FDI) in local supermarkets as it may decide on a proposal to allow 100 per cent FDI by foreign retailers such as Walmart and Carrefour SA. However, the catch is they need to agree to sell locally made products and invest at least 100 million dollars.

Indeed, the move is a partial reversal of Modi’s opposition to foreign retailers as he attempts to create jobs at the expense of alienating his core support base—traders. It maybe recalled that NDA had stopped foreign investment in multi-brand retail, enacted by the previous government, to fulfill a key campaign pledge after gaining power in 2014. The proposal to ease rules has other riders attached. Foreign retailers will have to spend at least $50 million on storage and logistics infrastructure and employ 1,000 people for every $100 million of investment, apart from sourcing 30 per cent of their products from small companies.

Traders are opposed to foreign retailers setting up stores India, as they feel it will endanger their livelihood. As of now FDI policy permits overseas companies to own 51 per cent stake in an Indian company in multi-brand retail even though the policy has never been implemented.