The government must protect the weakest links of the supply chain instead of relying on foreign and domestic ‘big-wigs’ to do so, argues Dharmendra Kumar at India FDI Watch
Amid protests from allies and political opponents, the Indian government first announced that it would allow foreign direct investment (FDI) in multi-brand retail trade (MBRT) in December 2011, but reversed its decision within a fortnight. The plans to allow FDI in MBRT had many conditions attached to them.
Foreign investors could invest 51% and open retail outlets only in cities with a population of 1 million or more; they had to bring in a minimum of US$100 million as part of their investment; and at least 50% of the total FDI brought in had to be invested in back-end infrastructure. Back-end infrastructure would entail capital expenditure on all activities, excluding front-end units. At least 30% of the procurement of manufactured processed products had to be sourced from small Indian industries with a total investment in plant and machinery not exceeding US$100 million.
Dharmendra Kumar is the director of India FDI Watch. He can be contacted at [email protected]