49% FDI Allowed In India Multi-Brand Retail

By admin • August 26th, 2010

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The Consumer Affairs Ministry in India has given the approval to allow 49% FDI into multi-brand retail via a letter to the Commerce Ministry.The consumer affairs ministry has said “Multi-brand retail should be permitted with a cap of 49 per cent… A significant chunk of investments should be spent on back-end infrastructure, besides logistics and agro-processing”.

The Ministry has however said a model law should first be put into place to protect state-level businesses that are owned and operated in a single location (mom-and-pop stores), to protect them from the larger retail firms. A senior government official said the Consumer Affairs Ministry has sought that the authorization of the National Shopping Mall Regulation Act to regulate the fiscal and social aspects of the retail sector, in addition to allowing mom-and-pop stores to become franchises of multi-brand retailers.

The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized sectors, India retail industry is one of the fastest growing industries in India, especially over the last few years. The BMI India Retail Report for the third-quarter of 2010, forecasts that the total retail sales will grow from US$ 353 billion in 2010 to US$ 543.2 billion by 2014. Currently 100% FDI is allowed in cash-and-carry retail and 51% is allowed in single-brand retail.

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