Decisions on FDI waits till Anand Sharma returns from abroad

Pending government decisions on FDIs in different sectors are expected this week after Union Minister for Commerce and Industry and Textiles, Anand Sharma, returns from the Czech Republic, sources said on Tuesday.

“The final call on FDI moves after the commerce minister returns on 12 September. No decision on modifying FDI cap for multi-brand retail has been taken yet,” government sources told CNBC-TV18.

Sources, privy to the development, said that clarification on single brand retail norms likely in the course of the week.

Another report in Firstpost said the minister will also meet his Micro, Small and Medium Enterprises (MSME) counterpart Vayalar Ravi later this week to discuss sourcing norms related to FDI in single brand retail.

“The commerce and industry minister wants to discuss the issue with the MSME minister and to find out a solution,” a source said. This will be preceded by a secretary level meeting of the two ministries.

The meeting assumes significance as Swedish furniture retailer IKEA, which plans to invest Rs 10,500 crore to set up its own stores in India, had sought relaxation in certain conditions related to the mandatory 30 percent sourcing from micro and small enterprises (MSEs).

Sharma has ruled out relaxing the 30 percent sourcing norm for foreign single brand retailers even as the MSME ministry has been opposing its relaxation saying it would affect interest of small units.

“Any relaxation which they demand, if it affects my people and industry, I won’t accept… We have to protect our MSEs and there is no compromise on that part,” Ravi had said earlier.

The Swedish furniture maker has also proposed that the calculation of the 30 percent norm be done for cumulative periods of 10 years of operations starting with the approval of the present application.

Meanwhile, the government removed 51 percent cap on FDI in single brand retail. As per the present single brand FDI policy, global retailers would have to source 30 percent of their total requirement in one year from Indian small industries. However, Prime Minister’s Economic Advisory Council has favoured for a 49 percent cap. The government has also proposed for a 51 percent FDI cap in multi-brand retailing.

According to a CNBC-TV18 alert, the government does not expect opposition from its ally Trinamool Congress on FDI in aviation. The cabinet note allowing 49 percent FDI to foreign airlines has already been moved.

“There is a very narrow window for FDI related reforms,” the sources said.

“It will be tough to make FDI announcements ahead of state elections,” the sources told CNBC-TV18.

The Gujarat election is slated for year-end.