Commerce and Industry Minister Kamal Nath Monday ruled out Foreign Direct Investment (FDI) in retail saying that government was awaiting the report of the study on retail.
”A study on retail in underway and report is still awaited. We have no plans for FDI in retail,” Nath was reported to have said, according to media reports.
Nath asked ICRIER to study the problems of small retailers with the entry of big corporate houses into organised retail. The report is expected in a month.
The last few months witnessed violent protests against domestic retail chains in several states from mom-and-pop stores which apprehend that their business would be affected.
The protesters could not have got a bigger boost than what Nath said “mom and pop stores is the country’s backbone and it is necessary to focus on them.”
Opposition to the opening up of $330 billion retail sector has come from various political quarters, and more vehemently from the key UPA ally, the Left parties. In fact, even Congress president Sonia Gandhi had expressed reservations against opening up of the sector.
The government allows 100 per cent FDI in cash-and-carry and wholesale operations and 51 per cent in single-brand retail.
Some multinational players like Wal-Mart, who had for long waited for the sector to be opened up, have since joined hands with domestic companies as their cash-and-carry partners.
India has been ranked World No 1 in the AT Kearney Global Retail Index, 2006, and according to industry estimates, the organized and unorganized retail market will grow to $427 billion by 2010 and $637 billion by 2015.
