As not a single dollar has flown in since the opened the doors to FDI in the retail sector, the government on Thursday tried to woo overseas investors by further relaxing investment norms in multi-brand retail, apart from raising the cap on foreign direct investment (FDI) caps in several sectors.

 

The Cabinet has diluted the mandatory 30 percent local sourcing norms for multi-brand retailers on one hand and on the other allowed states to include cities with population less than 1 million for allowing multi-brand retailing.

 

Commerce and industry minister Anand Sharma said the relaxation in multi-brand retail norms will give "more clarity and more space to investors". He also said multi-brand retailers like Wal-Mart of the US and Tesco of England will now have to source 30 percent of their products from small and medium enterprises only at the time of start of business.

 

With investment in back-end infrastructure, he said the investor will have to make the mandatory $50 million at the first engagement only. Thereafter, the investment would depend on the business needs. However, he made no reference to raising of FDI cap in insurance sector, over which an inter-ministerial group had last month agreed to raise it from 26 percent to 49.  The Cabinet, he said, has by and large cleared the decisions taken at the inter-ministerial group meeting chaired by the prime minister on July 16 to raise foreign direct investment caps and eased the route for some like oil refineries.

 

Economic affairs secretary Arvind Mayaram, whose recommendations for raising FDI in several sectors were by-and-large accepted, said, "we are expecting FDI flows will increase and the foreign investors will have much greater confidence in our foreign investment policy. I certainly think it will have a positive impact on the forex flows in the current year," he added.