Indian govt okays 51% FDI in multi-brand retail

14 Sep '12

2 min read

The Indian Government has approved 51 percent foreign direct investment (FDI) in multi-brand retail sector.

The latest Cabinet decision is expected to benefit consumers as the entry of retail giants would contribute in bringing down prices to a certain extent, especially at multi-brand outlets.

Last December, the Indian Government had put on hold the earlier Cabinet decision to allow up to 51 percent foreign direct investment (FDI) in multi-brand retail, to buy peace with the Opposition and allies who have been disrupting the proceedings of the Parliament on the issue.

Single-brand retail firms are already allowed to invest up to 100 percent FDI, after the Cabinet took the decision in November last year.

Some global retailers like Wal-Mart and Tesco are already present in India through cash-and-carry model, where 100 percent FDI is allowed. However, the latest Cabinet decision will help retail giants like Carrefour and Tesco to open their supermarket chains in India.

The Cabinet decision to allow 51 percent FDI in multi-brand retail would also impact local, family-owned businesses that enjoy a 90 percent market share in the retail segment.

Currently, the size of India’s overall retail market, including organized and unorganized, is estimated to be around US$ 550-600 billion. The opening of such a huge market to foreign investment would certainly boost investment manifold in Asia’s third-largest economy.

Fibre2fashion News Desk - India

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