The Hindu Business Line : PM wants expert group to review FDI in retail

Foreign entry
Group would undertake cost-benefit analysis
To assess possible impact on small-scale retailers
FDI currently permitted only for single-brand retailing

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New Delhi Feb 23 In the wake of the controversy surrounding FDI in the retail sector, the Prime Minister, Dr Manmohan Singh, has directed the Industry Ministry to constitute an independent expert group to undertake a comprehensive review of FDI in this sector.

The group would do a cost-benefit analysis of further opening up of the sector. It would be constituted soon, highly placed sources in the Government told Business Line.

In the second week of January, the Congress President and UPA Chairperson, Ms Sonia Gandhi, had written to the Prime Minister to take a cautious approach regarding the Government's FDI policy.

She had said that the implication of the policy on small players should be taken into consideration before arriving at a policy decision.

Though a Cabinet note has been prepared on further opening of the retail sector, and the Minister for Commerce and Industry, Mr Kamal Nath, had indicated majority foreign shareholding in select multi-brand retailing in specialised categories of items such as electronics, stationery and construction material, as things stand now the Government would take a decision only after the expert group submits its report, the sources said.

The terms of reference of the group would include an assessment of the possible impact of FDI in retail on economic growth, prices, small-scale retailers, vendors, farmers, consumers and manufacturers.

After undertaking the cost-benefit analysis, the group would make suggestions on the sectors that might be opened up, the sources added.

"It would also be the Government's endeavour, based on the report, to evolve a broader consensus before any policy is announced."

Meanwhile, reacting to the letter, Mr Kamal Nath said: "These are concerns that many people have written about.

"It is an ongoing exercise and there is nothing new about it. Our outlook has always been to protect small-scale retailers."

He added: "The retail sector has undergone huge expansion.

"One has to look at whether the sector can cope with the expanded limits."

However, he also said: "FDI is currently permitted only in single brand retailing and there are no plans current to allow FDI in multi-brand retailing."

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