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The Government today informed Parliament that it has allowed 51 per cent FDI in multi-brand retail, a decision which faced strong criticism, including from key UPA ally Trinamool Congress.
In a statement, the Commerce and Industry Minister, Mr Anand Sharma, said both in the Lok Sabha and Rajya Sabha that the policy on single brand retail has also been liberalised, removing the 51 per cent cap on Foreign Direct Investment (FDI).
Allowing FDI in multi-brand retail, which is dominated by neighbourhood stores, will be subject to riders including a minimum investment of $100 million (Rs 5,200 crore).
At least 50 per cent of the investment would in back-end infrastructure like cold storage, packaging and other logistics.
Global retail chains like Walmart and Carrefour will have to source at least 30 per cent of their requirements from small industries. Besides, they will be allowed only in cities with one million people.
The entire Opposition and Trinamool Congress protested against the decision by creating uproar in both the Houses. Trinamool Congress members joined the Opposition and trooped into the well shouting slogans against the decision.
In the Rajya Sabha, Mr Sharma’s statement giving details of the decision was torn into pieces by the CPI-M and BJP members.
In the din, Mr Sharma could not complete his statement and both the Lok Sabha and Rajya Sabha were adjourned till Monday.
While allowing 100 per cent FDI in single brand retail, the statement said the products sold should be of a single brand and should be sold under the same brand in one or more countries, other than India.
The single brand product retailing would cover only products, which are branded during manufacturing. The decision also made it mandatory that the owner of the brand will be a foreign investor.
“In respect of proposals involving FDI beyond 51 per cent, 30 per cent sourcing would mandatorily have to be done from SMEs/village and cottage industries, artisans and craftsmen,” the statement said.
Small industries have been defined as industries which have a total investment in plant and machinery not exceeding $1 million (Rs 5.2 crore).
The statement says that in case the valuation of small industries exceeds from the prescribed limit, the industry shall not qualify as small industry for the purpose.
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