The Hindu Business Line : Govt may allow FDI in single brand retail

THE Government is planning to open a small window for foreign direct investment (FDI) in retail by initially allowing such investments for trade in single brand goods only.

A proposal to this effect is on the agenda of the meeting of Group of Ministers (GoM) scheduled for Wednesday where a host of FDI liberalisation matters are slated to come up.

According to official sources, in opting for FDI for single brand retail trade, the argument forwarded is that sale of such goods would cater to a select clientele, different from those served by small retailers and the local `kirana' shops.

Since the proposed new retailers would deal with a single brand, they would not replace the existing retailers, the Government feels. This move would also allay the apprehensions of the Left parties and the BJP that FDI in retail would mean the end of the small traders and deprive millions of their livelihood.

Senior Ministers in the Manmohan Singh Government had indicated to Business Line in the recent past that while considering FDI in retail, the idea was not to displace the existing retail network in the country. What was under consideration was the demand potential of the newly emerging middle class which would be looking for specific products. "Where would you go if you want to buy a reputed electric drill,'' one of the Ministers had asked.

Also on the agenda for the Wednesday's meeting, is a proposal to allow 100 per cent FDI under the automatic route for laying natural gas and LNG pipelines. Another proposal is for allowing 100 FDI in captive mining in power, steel and cement projects in order to facilitate large investments in these sectors.

Similarly, 100 per cent FDI under the automatic route for power trading is also to be considered.

Another proposal is to allow 100 per cent FDI under the automatic route for exploration and mining of precious stones.

The agenda for liberalising FDI norms was drawn up by the Industry Ministry for Cabinet consideration, but because of the involvement of a number of Ministries, the matter was referred to a GoM. Headed by the Agriculture Minister, Mr Sharad Pawar, the group includes the Finance Minister, Mr P. Chidambaram, Commerce and Industry Minister, Mr Kamal Nath, the Telecom and Information Technology Minister, Mr Dayanidhi Maran, the Petroleum Minister, Mr Mani Shankar Aiyar, the Mines Minister, Mr Sis Ram Ola and the Civil Aviation Minister, Mr Praful Patel, and the Coal Minister, Mr Dasari Narayana Rao.

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