Opening of the retail sector to FDI in India is a welcome step, the article discusses some of the key changes pertaining to revised FDI policy.
The Indian retail sector has tremendously grown over the last decade with a significant shift towards organised retailing format. India’s retail market contributes to over 10 percent of the country’s Gross Domestic Product (GDP). The share of the Indian retail market is expected to increase by 60 percent to reach USD 1.1 trillion by the year 2020. the government of India has revised its foreign direct policy (FDI Policy) to allow foreign direct investment (FDI) in the retail sector subject to certain conditions. Some of the key changes in food retail are discussed below: The FDI Policy allows 100 % FDI in entities engaged in food retail however, the FDI Policy treats food retail different from other retailing provisions (whether single brand retail trading or multi brand retail trading). Retailing of food products produced / manufactured in India (whether single brand retail trading or multi brand retail trading) including via e-commerce requires prior Government approval. Although not expressly mentioned, it may be inferred that retailing of imported food products is not permitted by entities in India having foreign investment.