Retail to be opened for FDI in phases

The government is likely to open the retail sector for foreign direct investment in phases.

"It will be done in phases extending from three to five years," an official in the commerce and industry ministry said, adding, "Each phase will have a definite time-line. Also, the FDI caps will be relaxed further in each phase. We can allow 49 per cent FDI to begin with."

Capping the FDI limit at 26 per cent has not found favour in the ministry as many think it is too restrictive to be attracting foreign investment in the sector.

The official said in each phase, there would also be restrictions in terms of floor area the joint ventures needed to cover and the cities they could enter.

It is worth noting that the department of industrial policy and promotion (DIPP) is preparing a Cabinet note for allowing FDI in retail trading ventures.

The move follows a note from the department of consumer affairs, the nodal ministry for domestic trade and retail, to DIPP favouring opening up of the sector after a recent report by the Indian Council for Research on international economic relations made a strong case for opening up the sector to foreign investors.

Commerce and Industry Minister Kamal Nath will hold consultations with Left parties before finalising the proposal to allow FDI in the retail sector.