BJP looks to trigger FDI surge into retail sector after election victory
Indian retail: BJP’s resounding victory in this month’s Uttar Pradesh assembly elections is expected to trigger a speedy relaxation in the rules governing inward investment into India’s fiercely protected multi-brand retail sector, the Times of India reported on Monday.
According to its sources, the government is considering two means of tapping into the sector’s potential for job creation. With the current policy of restricting full overseas ownership to stores that sell only Made in India products failing to attract virtually any foreign investment at all, the first option would be to allow food retailers to generate up to 25% of their sales from non-food items such as kitchen products or toiletries in order to increase their attraction to overseas investment. A second, more radical option, would be to transform the multi-brand supermarket retail sector into a free-for-all.
The stakes are high; with an estimated value of more than $600bn and a population of more than 1.3bn, India’s retail sector is one of the largest and fastest-growing in the world, but remains dominated by the ten to twelve million small traders and ‘mom and pop’ stores that have up until now enjoyed robustprotection from the authorities.