After battling stiff opposition, Indian government on Fridayallowed 51 per cent foreign investment in multi-brand retail but left it to thestates to permit global retailers open stores.
It has also tweaked the sourcing norms for FDI exceeding 50per cent in single brand retail, requiring foreign firms, which want arelaxation of the 30 per cent procurement norms, to set up manufacturingfacilities in the country.
After considering various aspects and discussions withvarious stakeholders and states, it has been decided to go ahead with thedecision to allow 51 per cent FDI in multi-brand retail, India's Commerce andIndustry Minister Anand Sharma told reporters after the Cabinet meeting chairedby Prime Minister Manmohan Singh.
"The response has been a mixed one but the UPA hadtried to evolve a consensus," he said.
The cabinet had in November last year approved 51 per centFDI in multi-brand retail but had to put it on hold due to opposition frompolitical parties, including United Progressive Alliance ally TrinamoolCongress.
Sharma also reiterated that foreign retailers planning toenter the multi-brand segment would have to invest a minimum of USD 100 millionwith 50 per cent of it in rural areas.
The Minister said the firms will also have to source 30 percent of their products from Micro and Small & Medium Enterprises where FDIis 51 per cent and above.
Under the norms, 50 per cent of total investment will haveto be invested in 'backend infrastructure' within three years of the inductionof FDI.
"As far as the urban areas are concerned, they will beallowed to open stores only in cities with a population of more than onemillion, while in the case of hilly states, it will be up to the respectivestate governments," Sharma added.
