India unveils reform package to attract FDI
Our Correspondent, New Delhi
India unveiled a slew of big-ticket reforms to attract foreign direct investment with a first step towards partially opening the retail market to investors from abroad.A meeting of the cabinet on Tuesday night presided by Prime Minister Manmohan Singh approved 51 percent FDI in retail outlets for single brand products, Commerce and Industry Minister Kamal Nath told reporters here. This means multinationals will now be permitted to invest in retail stores of premium brands like Nike, Adidas, Gucci, Reebok, Chanel and Louis Vuitton, which had so far been allowed only through franchisee route. Although Left parties, which provide crucial support to the Manmohan Singh government, have been opposing FDI in retail business, Nath said FDI in single brand products would not displace jobs or affect the local industry but help generate employment.The cabinet also decided to allow 100 percent FDI through the automatic approval route in gas pipelines, wholesale and export trading on cash-and-carry basis, power trading, development of new airports, warehousing and processing for coffee and rubber, diamond mining, industrial explosives, market study and financing for petroleum sector, hazardous chemicals and coal mining for captive use. The commerce minister made it clear however that retailing of multiple brands would not be allowed even if they are made by the same manufacturer. But there would be no restriction on the number of retail outlets that can be opened, he added. He said the permitting FDI in single brand products was not prelude to anything as the bigger issue of FDI in retail sector was still under consideration of the government. The cabinet also decided to permit 100 percent FDI in distillation and brewing of potable alcohol, Nath said. However, unlike other sectors where FDI is allowed without clearance by bureaucrats, foreign direct investment in retail would be permitted after a nod from the government, Nath said. The latest round of liberalization of foreign direct investment regime is the first "comprehensive" review of FDI policies in 15 years, Nath said. "This is the first time in 15 years that the whole FDI policy has been reviewed in an integrated manner to remove anomalies and inconsistencies. This is not so much to revise caps as to simplify and rationalise the procedures," said an official statement.
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