States to decide fate of FDI in multi brand retail?

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Mumbai, Nov 30: FDI in retail has become the bone of contention not only with the opposition but also with allies of the government. State governments will have a louder say whether international retail giants like Walmart, Tesco would be allowed to set up a market through the foreign direct investment (FDI). According to Thomas Verghese, the Confederation of Indian Industry (CII), National retail Chairman and Aditya Birla Retail CEO, to enter the potential retail market sector, it requires 35 licences to set up a super market and 43 licences to set up a hyper market and all these should be granted by the States.

Meanwhile, 11 states are already strongly opposing FDI in retail. For which, business fraternity is now looking forward to progressive state governments to get in the international players in Indian market.

Reacting to fears that smaller shop owners will lose livelihood with the entry of the multinationals, Thomas Verghese said, “Over the last five years, modern retail's proportion in the total Indian retail sector has grown from 2 to 7 per cent, growing at 24 per cent annually. Over the same period though, smaller 'kirana' shops have grown at 10-14 per cent. The larger kirana shops closing down has less to do with the entry of modern retail but more to do with the younger generation owners choosing not to remain in the business.''

The government's new FDI retail policy to allow 51% foreign direct investment (FDI) in multi-brand retail segment will permit world's top retail giant like Walmart, Carrefour and Tesco to set up market in the country. Earlier, such retailers were not allowed to do retail business in India. The FDI proposal offers good prospects for large established Indian retailers. FDI would enable these players to attract capital for driving their expansion plans and in addition, benefit from scale, cost efficiencies and technology brought in by foreign retailers. The FDI proposal is likely to catalyse joint ventures between Indian and foreign organised retailers.

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