Lok Sabha Question No. 2928 (UNSTARRED), answered on 2019-07-10
Subject: FDI in Multi Brand Retail
Ministry: COMMERCE AND INDUSTRY
Asked by: Bidyut Baran Mahato, Sanjay Sadashivrao Mandlik, Gajanan Chandrakant Kirtikar

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE

## LOK SABHA

UNSTARRED QUESTION NO. 2928.

TO BE ANSWERED ON WEDNESDAY, THE 10 TH  JULY, 2019.

## FDI IN MULTI  BRAND RETAIL

## 2928.  SHRI BIDYUT BARAN MAHATO: SHRI SANJAY SADASHIV RAO MANDLIK: SHRI GAJANAN KIRTIKAR:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state:

## वाणिज्य एवं उद्योग मंत्री

- (a) the details of norms for permitting multi brand retail trading in the country;
- (b) the  number  of  foreign  companies  which  have  applied/registered  to  open  multi brand stores in the country at present, State/ UT and country-wise;
- (c) whether  the  Government  is  considering  any  increase  in  the  Foreign  Direct Investment (FDI) in multi brand retail sector in the country and if so, the details thereof;
- (d) whether the Government has made any study on the impact of FDI in retail market and on the employees attached thereto; and
- (e) if so, the details thereof and if not, the reasons therefor?

## ANSWER

## वाणिज् य एवं उद्योग मंत्री श्ी ीीयष  गोय) THE MINISTER OF COMMERCE & INDUSTRY (SHRI PIYUSH GOYAL)

- (a): Under  the  Foreign  Direct  Investment  (FDI)  Policy,  the  details  of  norms  for undertaking multi-brand retail trading in the country is enclosed as Annexure I.
- (b):      India  has  received  FDI  in multi-brand retail from one foreign company of United Kingdom. State/UT-wise data of FDI inflow is not centrally maintained.
- (c ): No such proposal is under consideration of the Government at present.
- (d)&(e): No Sir. The retail market sector depends on a number of factors, including FDI. However,  FDI  is  largely  a  matter  of  private  business  decisions.  FDI    inflows depend on a host of factors such as availability of natural resource, market size, infrastructure,  general  investment  climate  as  well  as  macro-economic  stability and investment decision of foreign investors.

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## ANNEXURE REFERRED TO IN REPLY TO  PART (a) OF LOK SABHA UNSTARRED QUESTION NO. 2928 FOR ANSWER ON  10.7.2019

## FDI Policy in Multi Brand Retail Trading

| Sector/Activity            | %of Equity/ FDI Cap   | Entry Route   |
|----------------------------|-----------------------|---------------|
| Multi Brand Retail Trading | 51%                   | Government    |

- (1) FDI  in  multi  brand  retail  trading,  in  all  products,  will  be  permitted,  subject  to  the  following conditions:
2. (i)        Fresh  agricultural  produce,  including  fruits,  vegetables,  flowers,  grains,  pulses,  fresh poultry,fishery and meat products, may be unbranded.
3. (ii) Minimum amount to be brought in, as FDI, by the foreign investor, would be US $ 100 million.
4. (iii) At least 50% of total FDI brought in the first tranche of US $ 100 million, shall be invested in 'back-end infrastructure' within three years, where 'back-end infrastructure' will include capital expenditure on all activities, excluding that on front-end units; for instance, backend  infrastructure  will  include  investment  made  towards  processing,  manufacturing, distribution,  design  improvement,  quality  control,  packaging,  logistics,  storage,  warehouse,  agriculture  market  produce  infrastructure  etc.    Expenditure  on  land  cost  and rentals,  if  any,  will  not  be  counted  for  purposes  of  backend  infrastructure.  Subsequent investment  in  backend  infrastructure  would  be  made  by  the  MBRT  retailer  as  needed, depending upon its business requirements.
5. (iv) At least 30% of the value of procurement of manufactured/processed products purchased shall  be  sourced  from  Indian  micro,  small  and  medium  industries,  which  have  a  total investment in plant & machinery not exceeding US $ 2.00 million. This valuation refers to the value at the time of installation, without providing for depreciation. The 'small industry' status would be reckoned only at the time of first engagement with the retailer, and such industry shall continue to qualify as a 'small industry' for this purpose, even if it outgrows the said investment of US $ 2.00 million during the course of its relationship with the said retailer. Sourcing from agricultural co-operatives and farmers co-operatives would also be considered in this category. The procurement requirement would have to be met, in the first  instance,  as  an  average  of  five  years'  total  value  of  the  manufactured/processed products purchased, beginning 1 st April of the year during which the first tranche of FDI is received. Thereafter, it would have to be met on an annual basis.
6. (v) Self-certification  by  the  company,  to  ensure  compliance of the conditions at serial nos. (ii), (iii) and  (iv) above, which could be cross-checked, as and  when  required. Accordingly, the investors shall maintain accounts, duly certified by statutory auditors.
7. (vi) Retail sales outlets may be set up only in cities with a population of more than 10 lakh as per  2011  Census  or  any  other  cities  as  per  the  decision  of  the  respective  State Governments,  and  may  also  cover  an  area  of  10  kms  around  the  municipal/urban agglomeration limits of such cities; retail locations will be restricted to conforming areas as  per  the  Master/Zonal  Plans  of  the  concerned  cities  and  provision  will  be  made  for requisite facilities such as transport connectivity and parking.
8. (vii) Government will have the first right to procurement of agricultural products.
9. (viii) The above policy is an enabling policy only and the State Governments/Union Territories would  be  free  to  take  their  own  decisions  in  regard  to  implementation  of  the  policy. Therefore,  retail  sales  outlets  may  be  set  up  in  those  States/Union  Territories  which have  agreed,  or  agree  in  future,  to  allow  FDI  in  MBRT  under  this  policy.  The  list  of States/Union  Territories  which  have  conveyed  their  agreement  is  at  (2)  below.  Such agreement, in future, to permit establishment of retail outlets under this policy, would be conveyed  to  the  Government  of  India  through  the  Department  of  Industrial  Policy  & Promotion  and  additions  would  be  made  to  the  list  at  (2)  below  accordingly.  The establishment of the retail sales outlets will be in compliance of applicable State/Union Territory laws/ regulations, such as the Shops and Establishments Act etc.
10. (ix) Retail  trading,  in  any  form,  by  means  of  e-commerce,  would  not  be  permissible,  for companies with FDI, engaged in the activity of multi-brand retail trading.
- (2) List of States/Union Territories as mentioned in Paragraph 5.2.15.4(1)(viii)
1. Andhra Pradesh
2. Assam
3. Delhi
4. Haryana
5. Himachal Pradesh
6. Jammu & Kashmir
7. Karnataka
8. Maharashtra
9. Manipur
10. Rajasthan
11. Uttarakhand
12. Daman & Diu and Dadra and Nagar Haveli (Union Territories)

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