August 1, 2013
India on Thursday relaxed foreign investment rules in the lucrative retail sector, the commerce minister said, in a renewed reforms push aimed at wooing global supermarket chains.
Premier Manmohan Singh’s government allowed foreign supermarkets to establish 51-percent joint ventures in the country in September 2012, but experts cautioned that restrictive conditions would deter retailers from investing.
Commerce minister Anand Sharma said foreign retailers will be allowed to invest 50 percent of an initial mandatory investment of $100 million to set up “backend infrastructure” within three years, but the government would not insist on further such investments.
Sharma added that the cabinet had also decided to overturn an earlier rule that only allowed foreign retailers to set up shop in cities with a population of at least one million people.
Several multi-brand retailers including Walmart, Tesco and Carrefour have expressed interest in India’s huge consumer market but have run shy since September’s announcement, citing difficult investment conditions.