Indian govt opens FDI route in supermarkets with riders (India)

The Government of India’s decision to allow up to 51 percent foreign direct investment (FDI) in multi-brand retail sector will come with riders.

 

As per the Government’s directive, global multi-retail chains like Wal-mart, Tesco and Carrefour would have to take approval from the Foreign Investment Promotion Board (FIPB) if they intend to invest in India.

 

The Government has also put up a minimum US$ 100 million investment cap for those willing to enter the giant Indian retail sector.

 

For FDI in India’s multi-brand retail sector, a minimum of 50 percent of total investment should be in “back-end infrastructure”.

 

The 30 percent local procurement clause, as applied to FDI in single-brand retail, would also be applicable for multi-national retail brands eager to set up supermarkets in India, according to the Government.

 

Above all, the retail chains would be allowed to be set up only in any of the 51 Indian cities that have a population of over one million, as per 2011 census.

 

The guidelines state that multi-brand retail outlets would have to be set up only in those states that have already agreed or will agree in future to the 51 percent FDI proposal.

 

So far, Andhra Pradesh, Assam, Haryana, Delhi, Rajasthan, Manipur, Uttarakhand, and Jammu & Kashmir states have expressed their support to the policy.