Nirmala Sitharaman says no to FDI in multibrand retail

Indian retailers are in the wait-and-watch mode as the new minister of state for commerce and industry Nirmala Sitharaman on Tuesday indicated that foreign players will not be allowed to open mega stores in the country.

Sitharaman said FDI in multi-brand retail trade (MBRT) will adversely impact the small traders and farmers.

"We have explained about FDI in multi-brand retail that it probably is not best opened up now because medium and small sized traders or small farmers have not been adequately empowered... if you open up the flood gates of FDI in MBRT, it may affect them," she said.

Retailers Association of India, industry body of Indian retailers said it will wait for more clarity from the government.

"We will have to wait and watch. If they don't allow FDI in multi-brand retail, then big foreign retailer may not be able to enter India. We will have to wait and see what the policies are..there were lot of encouraging signs for the retail sector in BJP's manifesto," Retailers Association of India CEO Kumar Rajagopalan told PTI.

Expressing hope for the sector, Kumar added: "BJP in its manifesto had said it will develop retail infrastructure. It talked about modernising retail and improving supply chain initiative," he added.

Future Group founder and chief executive Kishore Biyani declined comment but in an earlier interaction he had asked the new government led by Narendra Modi to frame a new retail policy under which segregations and FDI restrictions are not based on single or multi-brand but on the basis of types of stores.

Stating that India's regulations of the sector are out of sync with global practise, he said there is a need to redefine retail.

"We have to redefine retail in India. Nowhere in the world there is single brand retail and multi-brand retail. We should simply classify stores such as convenient stores, supermarket and hypermarkets and frame the policy accordingly.

You allow or restrict foreign investments in which kind of stores you would like."

Tesco, which is the only foreign retailer to apply for FDI in multi-brand retail, declined to comment.

In March this year, Tesco had announced forming of an equal joint venture with Tata group firm Trent by picking up 50 per cent stake in Trent Hypermarket Ltd (THL) for about 85 million pounds.

RP-Sanjiv Goenka Group Chairman Sanjiv Goenka refused to comment. Spencer's Retail is a part of RP-Sanjiv Goenka Group.

Other retailers such as Bharti Retail and Infiniti Retail Ltd, that runs Croma brand retail stores, declined to comment.