NEW DELHI: The government Friday formally announced its decision to allow foreign equity in multi-brand retail industry despite strong protests by the opposition parties which also forced an adjournment in both houses of parliament.
Commerce Minister Anand Sharma formally communicated the decision taken by the cabinet Thanksgiving Thursday, presided over by Prime Minister Manmohan Singh, allowing up to 51 percent foreign equity in multi-brand retail and 100 percent in single-brand format.
Addressing a press conference here, Sharma said the decision was taken after a year-long debate and consultations with all stakeholders in the most transparent and democratic manner. Comments were invited and examined over since July last year, he said.
“The minimum investment in multi-brand retail will be $100 million. This is minimum, and not the maximum. Fifty percent will be in developing rural infrastructure and 30 percent of sourcing will be from small and medium enterprises,” Sharma said.
These mega stores will only be allowed in cities with a population of over one million. Out of the 8,000 towns and cities in India only 53 cities fall under this category, the minister said, adding the guidelines of the new policy will be notified next week. Even as the minister was explaining the finer points of the policy, stocks of domestic retailers were virtually on fire. Kishore Biyani-promoted Pantaloon soared 18.94 percent, while Vishal Retail jumped 19.89 percent and hit the circuit.
Incidentally, the press conference was held soon after both houses of parliament were adjourned for the day after protests led by the Bharatiya Janata Party (BJP) and the Left Front. The Left parties are also planning to move an adjournment motion on the issue.
But Sharma said foreign retail chains would bring much needed investment for efficient supply chain and back-end infrastructure like cold storage which the country lacks, causing 40-50 percent wastage of fruits and vegetables. (IANS)