The Indian government has opened debate about relaxing its laws on foreign direct investment (FDI) in the retail sector, Business Week has reported.
At the moment, foreign companies are permitted to own 51 per cent of single-brand retail formats, but are prohibited from owning multi-brand outlets such as supermarkets and hypermarkets. Foreign companies are, however, allowed to own 100 per cent of wholesale businesses in India.
India's Department of Industrial Policy and Promotion has prepared a discussion paper on the issue, which aims to look at both sides of the argument.
The laws are in place to protect owners of smaller shops, but major retailers such as Wal-Mart, Carrefour and Tesco claim opening up FDI would help fund investment in farms and the supply chain, as well as reduce prices in the country.
The trade ministry is inviting submissions on the issue until the end of this month.
Meawhile, Bharti group chief Sunil Mittal has said that a gradual approach to the issue would be acceptable, so long as the laws were relaxed.
'I think anything is fine. To start with...a calibrated approach is fine,' Mr Mittal told the Economic Times.
Mr Mittal believes allowing FDI in India's retail sector would be enormously beneficial to the country's supply chain.
'I'm absolutely confident that this will be extremely good for the development of supply chain of food and farm produce in the country. No doubt about it. In two to three years time people will start seeing the result.'
