The government of India is planning to allow multi-brand retail to the foreign direct investment (FDI) showing its resolve to open up the sector to international chains.
The department of industrial policy and promotion (DIPP) was written a letter to the finance ministry and is also carrying out discussions with the agriculture ministry about the allowing FDI into the sector.
DIPP is responsible for framing the foreign investment policy for the central government. The department is under the commerce and industry ministry and is proposing to allow 100% FDI in defence production.
"The move to open up retail is part of the government's strategy to plug gaps in the food supply chain and more importantly, help bring down the difference between farm-gate prices and retail prices," said a DIPP official.
Presently, the government allows 51% foreign investment in single-brand retail only and it has been reluctant in opening up the sector to the FDI fearing blackish from the political parties.
The government will put forward the argument that the control of the units will remain in the Indian hands. The official indicated that government will put a cap of 49%.
International chains like US-based Wal-Mart and Germany's Metro AG who have set up shops in the country have been asking the government to open up the sector for FDI.
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