The government is likely to allow 51 per cent foreign direct investment in specialty retail ventures with certain riders. At present, 51 per cent foreign investment is permitted in single-brand retail and 100 per cent in cash-and-carry wholesale retailing.
Foreign companies setting up specialty retail outlets will not have a free run. The government is likely to restrict the number of shops such companies can set up. Further, the government may allow such companies to operate only certain retail formats and introduce restrictions on locations.
The department of industrial policy and promotion (DIPP) is of the view that opening up specialty retail does not pose any threat to Indian retailers. It has argued that international brands like McDonald’s, Pizza Hut and KFC have not crowded out local players like Bikanerwala, Haldiram and Dasaprakash.
The DIPP note also argues that consumers will be the ultimate beneficiaries of FDI in retail trade, as such a move will lead to lower prices and better quality of products and services.