The Hindu : Business : No setback to FDI in retailing: Kamal Nath

Online edition of India's National Newspaper
Saturday, Feb 10, 2007
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Business

Business

No setback to FDI in retailing: Kamal Nath

Special Correspondent

Scope for 51 p.c. FDI in electronics, stationery, sports goods

NEW DELHI: Notwithstanding Congress President Sonia Gandhi's missive to Prime Minister Manmohan Singh on the Bharti-Wal-Mart venture and Foreign Direct Investment (FDI) in retailing, in general, Commerce and Industry Minister Kamal Nath on Friday indicated that a few more specific retail segments could be thrown open to foreign investors.

Interacting with newspersons here, Mr. Kamal Nath declared that the recent row over Ms. Gandhi's letter on Wal-Mart would not be a setback while noting that with further easing of norms, 51 per cent FDI in certain retail trades such as electronics, stationery and sports goods was on the cards.

In fact, in a note prepared for the Cabinet, the Department of Industrial Policy and Promotion (DIPP) has argued in favour of FDI in retail trade of consumer electronics as also sports goods and other accessories through the FIPB (Foreign Investment Promotion Board) route. Opening up these segments to foreign investment, it said, would have no impact on `neighbourhood kirana stores.'

Retail trade in consumer electronics, the Department pointed out, had surged from Rs. 32,000 crore in 2004 to Rs. 41,500 crore in 2006.

Further growth by way of developing large retail space and supply chain logistics would require substantial investment.

Besides, imports of sports goods during the last fiscal were valued at $28 million and the demand for such items would only increase further in the coming years with the hosting of the Commonwealth Games. Citing an economic reason for permitting FDI, the Department argued that opening up these segments would result in greater sourcing of goods from local manufacturers.

As of now, the policy guidelines permit 100 per cent FDI in the `cash and carry' business through the automatic route and 51 per cent FDI in single brand retailing. For big operators, the franchise route is also available.

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