1. Govt Promises Relook at Retail FDI Norms
The government on Thursday promised foreign retailers a re-look at the stringent
investment conditions in the multibrand retail sector after its muchhyped opening-up
failed to enthuse them. “The objective of the policy is to encourage investments, job
creation, benefit to farmers and benefit to consumers. Therefore, we have sufficient
space to address those concerns, bring in the clarity, and an early and appropriate view
will be taken so that the guidelines can accordingly be given out,” commerce and
industry minister Anand Sharma told reporters after a two-hour long meeting with the
retail industry.
The Department of Industrial Policy and Promotion, the administrative department for
FDI policy, may to approach the Cabinet. DIPP has already begun consultations on the
recommendations of the high-level inter-ministerial panel headed by secretary,
department of economic affairs Arvind Mayaram that has suggested lifting the FDI cap
in multi-brand retail sector to 74%.
Representatives of retail companies, including Walmart, Tesco, Carrefour, Bharti, Aditya
Birla Group, Tatas, Reliance and Pantaloon, met Sharma seeking relaxation in FDI
norms that mandate 50% of investment in back-end infrastructure and at least 30%
sourcing from medium and small enterprises. “The industry raised two-three major
points like the 30% sourcing issue. We have said that it should be ‘preferable’ and not
‘mandatory,’” Bharti Enterprises vice-chairman and MD Rajan Bharti Mittal said. A
similar concession has already been made for foreign investors in single-brand retail
segment. Foreign retailers want agro sourcing to be a part of the minimum 30%
sourcing .Retailers also want relaxation on the issue of investment in the back-end
infrastructure.
"We should be asked to invest only 50% of the first tranche of the investment in back-
end infrastructure and the condition should not apply to every tranche of future
investment,” Mittal said.
The United Progressive Alliance government had thrown open the sector in September
last year after much hoopla and even put its own existence on stake. But, stringent
conditions imposed on foreign retailers have proven to be a big dampener with most

2. companies seeking clarification from DIPP. An attempt at simplification of norms earlier
this month disappointed both foreign and domestic retailers. As per the
clarifications, investment in the back-end infrastructure has to be specifically for the new
chain of stores that the foreign retailer would set up in India. It had also said the policy
only allowed processed products’ sourcing form MSMEs. All frontend stores also have
to be company-owned and operated.
“The purpose of this meeting has been to interact with the multibrand retailers, potential
investors, some of whom have established presence in India, in the backend or setting
up sourcing establishments,” Sharma said.
“It is ongoing dialogue between the government, the businesses and the investors.
Some questions have been raised. There has been speculation, and also misgivings. It
was important for the government to hear where are the areas or the issues which may
require some more clarity,” Sharma said.
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