TV
"Final approval of the policy (FDI) in multi-brand retail could take several more months," the US Department of Agriculture (USDA) said in its assessment of the policy developments in India.
The top level Committee of Secretaries (CoS) in India had in June allowed 51 per cent shareholding for global players in the retail sector dominated by neighbourhood kirana stores.
However, the CoS approval, which is yet to go to the Cabinet for its consideration, was given with several caveats.
These included a minimum FDI of USD 100 million for large format retail operations, which will be allowed only in cities with minimum one million population.
It also suggested that 50 per cent of FDI component has to be deployed in the back-end infrastructure, like warehousing and cold storage.
According to the USDA assessment, the UPA coalition government is moving gradually towards the policy opening for the sector in the backdrop of political opposition and resistance from small traders.
"The caveats likely reflect the current governing alliance?s incremental approach, given continued opposition from the minority Bhartiya Janta Party (BJP); small traders and NGOs that fear adverse impact on small traders and neighbourhood stores," the report said.
The USDA also felt that the central government would include a condition that the individual states will have a choice to allow or block FDI in multi-brand retail.
"this might limit the possible options for the international retail chains," it said.
Besides the CoS, an inter-ministerial group set by Prime Minister Manmohan Singh had also backed allowing international retail chains like Wal-Mart Stores to enter India in the hope that the move would help moderate high inflation.
General inflation is ruling near the double digit figure for several months despite tightening of the monetary policy by the Reserve Bank of India.
India already permits 51 per cent FDI in single-brand retail and 100 per cent FDI in wholesale retail.
