It has floated a proposal that foreign direct investment in multi-brand retail -- besides other restricted sectors such as defence, media and civil aviation -- be allowed in the form of downstream investment by entities having FDI up to 49 per cent, that is, those owned and controlled by Indians.
The plan will be discussed at an inter-ministerial meeting by the end of this month. It is mentioned in a discussion paper issued by the Department of Industrial Policy and Promotion under the commerce ministry.
Under the present rules, downstream investment by an entity owned and controlled by a resident Indian is not considered FDI. Thus, technically, such downstream companies are allowed to 'invest in any sector' without restriction, say DIPP officials.
DIPP issued a discussion paper on June 23 that suggested doing away with all FDI caps below 49 per cent.
In other words, it said entities with up to 49 per cent FDI should be allowed to invest in any sector provided they were owned and controlled by Indians.
Even though it seems a major change of policy, it's been on the table since February 2009, when Press Notes 2, 3, 4, which are now part of the Consolidated FDI Policy, were issued.
The question now is why did a joint venture like Bharti-Walmart, controlled by Indians, not foray into multi-brand retail? Experts say the
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