The Economic Survey approves opening up the retail sector in a phased manner, beginning with metros, and incentivising existing retail shops to modernise.

Besides addressing the concerns of farmers and consumers, the Survey said FDI in multi-brand retail could bring in technical knowhow to enlarge supply chains.

The Government currently allows 51 per cent FDI in single-brand retail and 100 per cent in cash-and-carry, while banning it in multi-brand retail.

“During 2011-12, projects worth Rs 24,143 crore are expected to be completed, adding a capacity of 168.6 lakh sq ft. During April 2006 to March 2010, India witnessed FDI inflows valued at $194.69 million in the retail sector, accounting for 0.21 per cent of total FDI inflows during the period,” the Economic Survey 2010-11 tabled in Parliament on Friday said.

The survey also noted that FDI in retail is permitted in countries such as Brazil, Argentina, Singapore, Indonesia, China and Thailand without any limit on equity participation, while Malaysia has equity caps.

“A total of 94 proposals have been received till May 2010, of which 57 were approved,” the Survey said.

The Survey added that the domestic retail sector is expected to record healthy sales in 2010-11 and grow by 10.2 per cent in 2011-12. The sector's PAT margin is expected to expand over the next three years on account of a faster rise in income vis-à-vis expense.

For the year ending March 2011, projects worth Rs 8,281 crore are expected to be completed, adding retail space of 115.1 lakh sq ft, it added.

The Survey, however, pointed to limitations in the regulation of the sector due to the absence of a national framework.

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