Govt may allow FDI in multibrand in retailing

The Government is trying one more time to open foreign direct investment (FDI) in multi-brand retailing. However, if the proposals past muster with its allies, especially with the Left, such investments would come with strict riders on the role and functioning of the foreign partner in running the Indian venture.

This move would allow foreign retailers like Wal-Mart, Metro and Carrefour to enter the Indian market through joint ventures for multi-brand stores. As the present norms permit only up to 49 % FDI in single-brand retail ventures, foreign retail companies are forced to enter into licensing agreements with domestic firms to set up shop here.

According to senior government officials, once an agreement on the fresh proposals is reached among different wings of the Government, the equity that can be owned by the foreign partner would be decided. Sources, however, indicated that the Government is likely to permit only a small shareholding by the foreign partner.

The officials said that the foreign partner would have a very limited role in the management of the venture, with curbs on the number of positions on the board. In addition, the chairman of the board would have to be an Indian. Foreign partners would not be allowed special powers by way of board resolutions or articles of association

Courtesy:indianexpress.com
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