India needs to fully open its retail market to foreign investors in order to drive economic growth, although the subject was strictly taboo till last year because of pressure from the government's allies and livelihood concerns.
Making a strong case for opening up multi-brand retail to FDI, the Economic Survey, tabled in Parliament, said that a beginning may be made with food retailing.
Improving the investment environment would require "FDI in multi-format retail, starting with food retailing," it said, adding that initially the FDI could be allowed subject to the setting up a modern logistics system, perhaps jointly with other organised retailers.
"A condition could could also be put that it must have (for five years say) wholesale outlets where small, unorganised retailers can also purchase items (to facilitate transition)," the Survey said.
India allows 51 per cent FDI in single brand stores like Nokia, Louis Vitton and Nike. It also allows 100 in wholesale cash & carry model, but has kept out FDI in multi-brand retail owing to political opposition as also that from mom and pop store operators.
A recent Parliamentary Standing Committee report had not only opposed FDI in retail but also the entry of big domestic players to protect the unorganised sector.
