India eyes foreign retailers for ‘made-in-India’ push?

MUMBAI: Prime Minister Narendra Modi’s government is considering easing rules for foreign retailers if they agree to sell more locally produced goods, according to an official with knowledge of the matter.

Global companies with a permit to sell local food items — Amazon.com Inc has applied for a licence — may also be allowed to market “made-in-India” nonfood products such as toothpaste and towels worth about 25 per cent of total sales, said the official.

India may also allow more foreign direct investment in multibrand retail if companies such as Wal-Mart Stores Inc and Carrefour SA agree to stock only local products.

While India already offers 100 per cent foreign ownership in food and 51 per cent in multibrand retail, there are few takers due to strict rules including those that require companies to put half their investment into warehouses and other back-end infrastructure.

The proposals can also help Modi’s flagship “Make-in-India” campaign to boost local manufacturing. While India attracted US$324 billion (RM1.4 trillion) foreign direct investment from 2000 through the end of last year, the biggest share of US$58 billion has gone to services and only about US$14 billion has come into trading.

About 44 per cent of India’s US$620 billion retail market comprises food and grocery items, said Arvind Singhal, chairman at consultancy firm Technopak Advisors Pvt.

While the sector has been growing by 12 per cent each year, foreign companies are staying away because the government’s policies are too restrictive or confusing, he said. Bloomberg