FDI in retail can boost farm sector
The Government seems to be in a fix over the issue of allowing FDI in retail. Conflicting reports have emerged in the last couple of weeks on the investment ceiling to be permitted for opening up the sector to foreign competition. While one report states that only 49% FDI will be allowed initially, another piece pegs that cap at 51%. Anything over 50% gives a company majority control. That would be fairly difficult to achieve given the stiff opposition from the Left parties, the chief prop of the Congress-led coalition. On the other hand, anything less than majority could keep big MNCs at bay. A few of them have made it clear that they won't enter the Indian retail sector unless given a majority control in their ventures. Which way the cookie will crumble only time will tell.
The media reports also talked of restrictions to be placed on foreign players. The Government may initially allow overseas retailers to set up shops only in major cities. Again, there will be limits on the number of outlets for each company, the size and nature of the outlets. Besides, FDI will be allowed in phases and in select areas only, something that China did when it allowed FDI in its retail sector back in 1992. Could it be that the New Delhi is following in the footsteps of the Middle Kingdom, which has benefited a great deal in the 13 years since it first dismantled the entry barrier in retail. Or, is it the fear of opposition by the communists that has prompted the Government to adopt a 'go slow' approach on this critical but controversial issue.
The Government's cautious stance on the politically sensitive issue is understandable since he Left parties have made no bones about their opposition to opening up retail to foreign investo ...