In an attempt to allow more foreign capital, the Industry and Commerce Minister Kamal Nath plans to ease out restriction on Foreign Direct Investments in Retail Sector. The minister aims to relax the cap and increase it to 49% in multi-brand retail sector.

Though Nath has continuously denied of any such relaxation but the government officials claim that a proposal for the same has been put forth in front of the other ministries and also plans to eliminate the cap on single brand sector which is again 49%. Increment on FDI limit in infrastructure is also being looked for, which will be 74% from present 49% on broadcasting in order to give a boost to direct-to-home business.

The liberalization in retail sector has never been approved by the left front who assert that the local market, the ‘kiryana store’ would see a downfall affecting its owners however in a recent study done by Icrier shows that, there will be an immediate impact on the local market yet in long term scenario there will not be much of effect on the unorganized retail sector.

The foreign inflow is just one of the reasons for the relaxation as by resorting for this measure the technological advancement together with the improvement in working conditions of those employed in this sector will be seen forth.

The proposal is yet to get consent from the Cabinet which seeks for inflow of FDI in multi-branded retail in electronic and sports goods items and will also help the global giants to set up their their unit, the companies who were waiting since long to enter the Indian retail market. Expansion in exports from medium and small units is likely to be seen through this.