A leading economic think-tank on Thursday advocated allowing foreign direct investment of upto 49 per cent in the retail sector backed with reforms like repeal of Essential Commodities Act even as the Left parties continue to oppose any opening up of the sector to foreign investment.
"In the initial stage FDI up to 49 per cent should be allowed which can be raised to 100 per cent in 3-5 years depending on the growth of the sector. FDI cap below 49 per cent would not bring in desired foreign investment," said Arpita Mukherjee, senior fellow, Indian Council for Research on International Economic Relations.
Pointing that the retail sector, which contributed 10 per cent of the country's GDP was highly fragmented, ICRIER suggested a 3-5 year time frame for complete opening to give domestic retailers enough time to adjust to changes along with doing away with MRP-based pricing.
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