In­dia said to mull back­ing for­eign in­vest­ment in su­per­mar­kets

Muscat Daily - - BUSINESS -

New Delhi, In­dia - In­dia is con­sid­er­ing a pro­posal to lift a cap on in­vest­ment by for­eign re­tail­ers in lo­cal su­per­mar­kets, ac­cord­ing to peo­ple with the knowl­edge of the mat­ter.

In­dian Prime Min­is­ter Naren­dra Modi on Fri­day held a meeting with se­nior gov­ern­ment func­tionar­ies to re­view the coun­try’s cur­rent for­eign di­rect in­vest­ment (FDI) pol­icy.

Com­merce and In­dus­try Min­is­ter Nir­mala Sithara­man, among oth­ers, at­tended the meeting which was held at the Prime Min­is­ter’s res­i­dence. The meeting is un­der­stood to have dis­cussed mea­sures to fur­ther lib­er­alise the pol­icy, so as to at­tract more FDI in var­i­ous sec­tors

The meeting said to have dis­cussed a pro­posal to al­low 100 per cent in­vest­ment by re­tail­ers such as Wal-Mart Stores Inc and Car­refour SA if they agree to sell lo­cally made prod­ucts and in­vest at least US$100mn, ac­cord­ing to peo­ple with the knowl­edge of the mat­ter who asked not to be iden­ti­fied.

The move is a par­tial re­ver­sal of Modi’s op­po­si­tion to for­eign re­tail­ers as he at­tempts to cre­ate jobs even at the ex­pense of alien­at­ing his core sup­port base - traders.

Af­ter com­ing to power in 2014, Modi’s ad­min­is­tra­tion barred for­eign in­vest­ment in multi-brand re­tail, en­acted by the pre­vi­ous gov­ern­ment, to ful­fill a key cam­paign pledge.

The pro­posal to ease rules has other riders at­tached. Re­tail­ers will have to spend at least US$50mn on stor­age and lo­gis­tics in­fra­struc­ture and em­ploy 1,000 peo­ple for ev­ery US$100mn of in­vest­ment, apart from sourc­ing 30 per cent of their prod­ucts from small com­pa­nies, the peo­ple said.

Jagdish Thakkar, a spokesman in the Prime Min­is­ter’s Of­fice, didn’t re­turn calls seek­ing com­ment, while Min­istry of Fi­nance’s spokesman D S Ma­lik didn’t an­swer calls.

Lo­cal traders are op­posed to for­eign re­tail­ers set­ting up stores In­dia, say­ing the move will en­dan­ger their liveli­hood. The cur­rent FDI pol­icy per­mits over­seas com­pa­nies to own a stake of up to 51 per cent in an In­dian com­pany for multi-brand re­tail even though the pol­icy has never been im­ple­mented.

The Food Pro­cess­ing Min­istry has been push­ing to par­tially ease rules for re­tail­ers that would al­low them to sell soaps, sham­poos and tooth­pastes along with food prod­ucts. Food Pro­cess­ing Min­is­ter Har­sim­rat Kaur Badal in an in­ter­view in May said the move could lead to at least US$10bn in the sec­tor over the next two to three years.

In­dia’s food and gro­cery mar­ket is the world’s sixth largest, with re­tail contributing 70 per cent of sales. Food is one of the largest seg­ments in In­dia’s re­tail sec­tor, val­ued about US$600bn. In­dia at­tracted US$935.74mn FDI in re­tail trad­ing from April 2000 to De­cem­ber 2016.

Some of the for­eign re­tail­ers have either closed down or cur­tailed op­er­a­tions due to pol­icy un­cer­tainty. In 2013, Wal-Mart ended its In­dia whole­sale joint-ven­ture af­ter fac­ing trou­bles in the coun­try where it was in­ves­ti­gated by the gov­ern­ment as well an in­ter­nal probe for vi­o­la­tions of US anti-cor­rup­tion laws.

Car­refour SA, France’s big­gest re­tailer, closed its five In­dian whole­sale stores last year, ending its four year pres­ence in the South Asian na­tion.

Groupe Auchan SA, an­other French su­per­mar­ket op­er­a­tor, in Au­gust ended its fran­chise agree­ment with bil­lion­aire Micky Jag­tiani’s Land­mark Group.

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