FDI in multi-brand retail notified

The government on Thursday notified its decision to allow 51 per cent foreign direct investment (FDI) in multi-brand retail with immediate effect. “51 per cent FDI in multi-brand retailing, in all products, will be permitted ...,” a notification by the Department of Industrial Policy and Promotion (DIPP) said.

Now with the notification, the government has made it amply clear that it will not succumb to pressure by those parties who are opposed to FDI. This is a clear indication that the government is firm on going ahead with the reforms process even it means that it has to operate as a minority government.

The notification also clearly indicates that the government has agreed to the demands of Swedish retail brand IKEA which has raised objections to government asking it to procure at least 30 per cent of their merchandise from SMEs.

This step is being seen as an effort by the government to make the FDI in retail more conductive for other international brands thus creating a healthy atmosphere for investment in the country.

The DIPP also operationalised September 14 Cabinet decisions to relax the sourcing norms for foreign retailers investing beyond 51 per cent in single-brand retail and allow 49 per cent FDI by foreign airlines in the domestic carriers.

Besides, the decisions on permitting 49 per cent FDI in power exchanges and increase in foreign equity cap from 49 per cent to 74 per cent in the service providers like DTH in broadcasting sector have also been notified.

In the most controversial area of FDI in multi-brand, the DIPP said the State Governments and UTs would be free to take their own decisions.