New Delhi: India has a positive mindset about opening up its multi-brand retail sector to foreign firms but New Delhi must take into account concerns over jobs in small, independent outlets, commerce minister Anand Sharma said on Monday.
India’s retail sector is largely closed to foreign firms and favours small family-run stores, with 51% of foreign direct investment (FDI) allowed only in the single-brand retail sector. Multi-brand retail is restricted to cash-and-carry or wholesale outlets.
India’s moves to open up the sector to foreign direct investment has been a headline issue ahead of US President Barack Obama’s visit to India, with the likes of retail giant Walmart Stores Inc eager for market share.
Some Indian officials have made positive noises about opening up the sector in the run-up to Obama’s visit but the issue is a political minefield and has provoked an outcry from opposition parties.
“There are many who have their concerns, who feel that the small retailer would get hurt. And that sector as such supports close to 50 million jobs,” Sharma said at a conference that also hosted the US treasury secretary and India’s finance minister.
Opening up the sector would ease massive supply bottlenecks that have contributed to keeping inflation stubbornly high in India, Asia’s third-largest economy.
“We have very a positive mindset but in any democracy ... recognizing that these are the issues, we move forward, creating in the process a broad-based consensus. The number of skeptics has come down,” he said.
The government released a discussion paper on opening up the sector earlier this year in what was seen as a small step toward reform.