"The nature of the retail sector is too complex for a hasty decision.... Only 2 per cent of the business is in the organised sector and of the remaining 98 per cent, 50 per cent is subsistence retailing," the minister said at a seminar organised by the Federation of Indian Chambers of Commerce and Industry.
The turnover of the retail sector was estimated at Rs 400,000 crore (Rs 4000 billion). He also said that experience had suggested that large retail chains had created monopolies in the sourcing business.
Nath further said that Wal Mart had proposed assured sourcing of billions from India in return for setting up chains in the country but he had turned down the idea.
Seeking a public debate on foreign direct investment in retail, he said any FDI should be incremental and not displace or replace the existing investment.
He pointed out that focus should be on policy initiatives for the growth of the sector.
"We are very clear that if at all FDI is permitted in retail trade, it should lead to incremental economic benefits and not substitute the on-going activities. There is no question of replacing or displacing what we already have. It must add to economic activity," Nath said.
"This whole fixation of permitting or not permitting FDI in the retail sector is, in my opinion misplaced. FDI is not an end in itself but a means towards the end," he added.
Nath, however, did not give a timeframe as to when the views would be firmed up.