World Bank favours FDI in retail sector

"The retail sector in India today is a case of low core sector both domestically and internationally," Uri Dadush, director, development prospects group, World Bank said in New Delhi at the India launch of Global Development Finance report.

He said the opening up of retail sector to the foreign investment would be beneficial to the country in terms of price and the availability of products.

Asked whether FDI or use of foreign exchange reserves would be beneficial to countries like India, Dadush said the World Bank did not consider FDI as a primary investment source and one cannot see any trade-off between FDI and reserves.

Citing the report, he said the FDI inflow to India was estimated at $5.3 billion, higher than $4.3 billion during 2003.

According to the report, FDI inflow was expected to slow down to $56 billion in China in 2004 from as high as about $60 billion in 2003.

Referring to FDI outflows from developing countries like India, Dadush said there was a growing realisation of South-South relations and cited the visit of Chinese delegation now touring India.

The report said companies from China, India, Malaysia, Russian Federation and South Africa had become important investors in many poor countries.

On forex reserves, he said India had reserves to meet 14 months import as compared to the standard level of meeting imports for six months.