The Govt is likely to let Foreign Direct Investment in Front End Retail across all formats for Global Companies to enter. The Central Government's stand is this will help organize food, spices & vegetables retailing thus reducing the inflation.
The development could be a challenge for global chains like Wal‐Mart, Metro and Carrefour which have been waiting since long for India to open FDI in multi‐brand retail. Even if the Centre throws open the sector to overseas investment, several states, particularly those ruled by BJP, may not allow entry of these chains, thus impacting the latter’s front‐end plans.
Commerce Ministry have set additional conditions,
Minimum FDI of USD 100 mn, half of which must be invested in back‐end infrastructure like cold storage, soil testing labs and seed farming. Another rider is that cities with a population of 1 mn (based on 2011 Census) can be locations for multi‐brand retail stores. An area of 10 km around municipality limits of such cities could also be included in the permission location.
India’s total retail sector is estimated at USD 590 bn, with the unorganized sector accounting for USD 496 mn, according to an Icrier report. By opening the retail sector for FDI, organized retail penetration can swell significantly, benefiting retail firm
