News: Assocham seeks FDI in retail through automatic route

(PTI 08/02/2007) New Delhi - Industry body Assocham on Thursday said the Government should allow only 49 per cent FDI in the retail sector through an automatic route instead of opening 100 per cent equity option through various routes.

In a note sent to Prime Minister Manmohan Singh and the UPA Chairperson Sonia Gandhi, the chamber has said that FDI in retail should be encouraged to push up agriculture, rural economy and to generate huge employment opportunities.

Assocham President Venugopal Dhoot said the government's decision to resort to various routes permitting retail FDIs of 100 per cent through cash and carry and franchising route and 51 per cent in single brand has created confusion in the recent past.

The ceiling should be raised in a phased manner to give a minimum three years time to domestic retail business to organise itself before it was prepared to take on 100 per cent competition from overseas businesses, it said.

"The organised retail in India was still at a very nascent stage and forms only less than 5 per cent of the entire retail trade and throwing it open to FDIs will disorganise the domestic retailers without letting them prepare for foreign competition," Dhoot said.

In a few years hence, the share of organised retail is expected to go up substantially and India would be far more attractive and ripe to attract higher levels of FDIs. Even China opened up its retail only after it ensured its domestic retail industry's maturity.

India should not liberally open up its retail sector now as it was capable of attracting larger sums of foreign investments a few years later, it said.