The Week in Review for 25 November 2011
The Week in Review for 25 November 2011
Reforms have returned. In a sweeping move on Thursday, the Union cabinet finally allowed foreign firms to invest in retail outfits in India. The new rules allow for 51% foreign direct investment in multi-brand retail. For single brand retail that number reaches 100% from the original 51%. India’s retail industry is estimated to be worth about 450 billion dollars. Most of that is of course, represented by traditional stores. But most big organized retail firms have welcomed the government’s decision. Among other things, they claim foreign capital will allow for investment cold chains that will reduce food waste and hence moderate food prices.
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The new rules allow for 51% foreign direct investment in multi-brand retail. For single brand retail that number reaches 100% from the original 51%.
Of course, there are some riders attached to opening up of retail to FDI. For one, foreign outlets will only be able to set up base in cities with a population greater than a million. More significantly, overseas retailers will have to invest a minimum $100 million in India. And half of the investments will have to go into back-end infrastructure. Also, overseas companies will need to source 30% of their goods from small scale industries.
India’s food inflation is finally showing some signs of easing. The country’s food price index climbed 9.01% in the period to 12 November. That’s a steep fall from the previous week’s 10.63%.
The founder of SKS Microfinance has quit the company. Chairman Vikram Akula stepped down from his post on Wednesday. His exit comes during a time when SKS is struggling and plans to raise Rs900 crore through a share sale. The SKS board is still looking for a new chairman.
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