Department of Industrial Policy & Promotion Secretary Saurabh Chandra told Business Standard that a foreign retail chain was free to buy a brownfield (existing) facility but it would need to invest at least $50 million “towards creating additional back-end infrastructure there”.
Greenfield units relate to areas where no previous facilities existed, while brownfield ones are those often under-used projects that have potential for re-development.
In effect, a foreign player can tie up with an Indian retailer that already has back-end infrastructure, provided it makes the mandatory investment in creating additional facilities to strengthen the cold chain.
While American chain Walmart is in a JV with the Bharti group for wholesale outlets, the two have been in talks to extend the partnership in retail as well. UK-based Tesco, which is in a tie-up with the Tatas for wholesale, may also widen the scope of partnership.
Its representatives are likely to meet Commerce Minister Anand Sharma on Friday.
Ever since the government allowed up to 51 per cent foreign direct investment in multi-brand retail late last year, global brands keen to set up stores in the country had raised doubts over the policy, especially over back-end investment. According to the policy, “the minimum amount to be brought in as FDI by a foreign investor would be $100 million.
At least 50 per cent of the total FDI brought in shall be invested in back-end infrastructure within three years of the first tranche of FDI.”
The policy is quiet on whether the investment must go into new back-end or existing facilities like cold storage.
Other issues around which these chains had been seeking clarifications include 30 per cent sourcing from medium and small enterprises and state-wise
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