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India optimistic on opening up its retail sector to FDI
Nov '10
Though the Government of India is hopefully considering the proposal of allowing entry of foreign firms into its multi-brand retail sector, the centre even needs to consider the issue regarding employment in small, independently owned stores.

Foreign firms yet have not been able to widely explore the country's retail sector, which basically supports the small family-owned stores and businesses. Further, it is only in the single-brand retail sector that 51 percent foreign direct investment is allowed, while the multi-brand retail sector limits itself to cash-and-carry or wholesale stores.

India's stand on allowing foreign direct investment in the sector remained a key issue for discussion prior to the US President Barack Obama's visit; more so because retail majors including the Wal-Mart Stores Inc were very much keen for their access in the Indian market.

Though, Indian Government was optimistic on throwing open the sector to foreign investment prior to Obama's visit, but the matter has taken a political form, and has stirred up the opposition.

Many people even voiced their concerns stating that, the move would prove detrimental to small retailers and the sector which is a source of livelihood for nearly 50 million people.

Granting such access would greatly hinder the supply, which is one of the factors responsible for retaining the inflation rates at persistently high levels in India, which is the third biggest economy of Asia.

Though, India possesses a very optimistic frame of mind, but then in any democratic state, the Government needs to consider the key issues before making any decision, and also needs to reach a consensus with others before arriving at any decision. The government is trying to do the same and as such is cutting down the number of sceptics while winning their confidence.

Government of India, in the beginning of the year, had released a discussion paper on granting access to FDI. This has been viewed as a basic step towards transformation.

Fibre2fashion News Desk-India

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