Foreign institutional investment could be outside the 51 per cent foreign direct investment limit approved by the Cabinet for the retail sector.
In other words, the total foreign investment in the retail sector could go up to even 100 per cent provided foreign retail companies sell products under a single brand. This was indicated by Commerce and Industry Minister Kamal Nath at a news briefing in Davos on Thursday.
Asked if FIIs were kept out of the FDI limit, would it mean that they could invest in the retail sector over and above the 51 per cent FDI, the minister said, "I see no harm in that."
Nath, who is here to attend the annual meeting of the World Economic Forum, and will also attend a WTO meeting of the world's trade ministers, said the decision to open the retail sector to FDI was aimed at bringing in more foreign investments and creating more jobs.
An estimated 100,000 more jobs would be created in the retail sector after the policy liberalisation, he said.
The minister clarified that all proposals for FDI in retailing would be cleared by the Foreign Investment Promotion Board.
The government's policy was to raise annual FDI flows into the country to $10 billion in 2006-07 compared with an estimated inflow of $7.5 billion in the current financial year. This level of FDI would also create 15 million more jobs, he said.
When asked if the Left was happy with the policy change, Nath said he did not see this as an issue. "I do not need to pacify the Left," he said.
Later, addressing a WEF session on trend-spotting in 2020, Nath argued that the hub of world economic activity was shifting from the Atlantic Ocean to the Indian Ocean. India's technological skills aided by its attractiveness as a manufacturing centre would make the country the hub of not only information technology, but also of manufacturing, he said.
Some of the sectors where India saw itself as establishing as a dominant player were engineering goods, chemicals, pharmaceuticals, biotechnology, leather goods and lifestyle products. The minister also brushed aside suggestions that politics could ever triumph over economics.
"Political success will lie in the art of facilitating faster economic growth through innovative policy intervention, rapid deregulation and infrastructure development. Good politics and good economics can accomplish this goal," he said.
