Three days after the United Progressive Alliance chairperson Sonia Gandhi cautioned the government against further opening of the retail sector to foreign investors, it is business as usual in the commerce and industry ministry.
When contacted by Mint, commerce and industry minister Kamal Nath said: “There is no impact on single brand retail.”
Senior officials of the Department of Industrial Policy and Promotion (DIPP), the nodal department for policy pertaining to foreign direct investment, also confirmed that they would continue to consider the proposals in the single-brand retail sector.
“We have not received fresh proposals but those that are lying with us will be considered as per the normal course. There is no change in our position,” a senior official, who did not wish to be quoted, said.
At present, the government allows 51% foreign investment in this sector.
Asked if the soon-to-be-inked venture between Wal-Mart Stores and Bharti would be impacted, the official said, “Bharti has not even come to us. Their proposal is permitted under the automatic route, they do not need our approval.”
Similarly, the department is waiting to hear from Starbucks Singapore Investment Pte Ltd on its pending proposal to pick up to 18% stake in New Horizons Retail Private Ltd for setting up Starbucks cafes and retail trading of Starbucks’ products. “We had some queries, we are still waiting for their response,” the official said.
The DIPP has so far received 16 proposals in the single brand retail sector of which nine have been approved and three rejected. Among the rest, two are under examination, one is pending clarifications from the company (Starbucks) and another proposal is under submission.
The two proposals which are under examination include Fabindia Overseas Pvt Ltd’s proposal to tie-up with US-based Fabindia Inc. and WCP Mauritius Holding to allow retail trading of Fabindia products including handicrafts, garments, accessories and home furnishing. The other proposal pertains to Socomec for retail trading of single Socomec brand UPS systems and related accessories. A proposal of Lee Cooper International Ltd for undertaking retail trading of Lee Cooper products in the men’s ready-to-wear is under submission.
In a related development, the Associated Chamber of Commerce and Industry of India (Assocham) has asked Congress president Sonia Gandhi to open the country’s retail sector for a minority foreign investment and have a clearer policy on overseas investment in the sector. Assocham recommended to the government to restrict foreign ownership to 49% for three years to allow “domestic retail businesses to organize” themselves before permitting foreigners to invest in fully-owned local subsidiaries, Assocham president Venugopal Dhoot said. The “different routes have created utter confusion” among potential overseas investors, Dhoot wrote in a letter to Gandhi. This has “caused the government to invite unnecessary criticism and scepticism from various quarters of industry, landing it in a great embarrassment which could have been avoided in case the retail sector was opened up in a phased manner,” the letter said.
Rasul Bailay contributed to this story