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Sunday, 27 November 2011

Cabinet likely to approve FDI in multi-brand retail tomorrow

The government is likely to approve 51 per cent foreign direct investment (FDI) in multi-brand retail tomorrow, a  decision that will allow global mega chains like Walmart, Tesco and Carrefour to open outlets in India.

Increasing the foreign investment (FDI) ceiling to 100 per cent from the present 51 per cent in single-brand retail is also on the agenda of the Union Cabinet meeting  scheduled for tomorrow, sources said.

Most ministries, including the finance and the textiles, are in favour of the industry ministry's proposal to open the politically sensitive sector to foreign players and the Cabinet will take a final call, they said.

Earlier, a panel headed by Cabinet Secretary Ajit Kumar Seth had recommended 51 per cent FDI in multi-brand retail with certain riders, like minimum investment of $100 million and local sourcing.     

The decision on the issue is pending for over two years as Opposition parties are against foreign investment in this sector. The $600-billion segment is dominated by small kirana (mom & pop) shops.

The Opposition has expressed concerns that allowing majors  global retailers would lead to unemployment among the unorganised sector.

The government had opened the single-brand retail for FDI  way back in 2006 and ever since 60 foreign players have entered the country in joint venture with local firms. Several global retailers are waiting in the wings to  enter India's multi-brand retail segment.

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