Currently, with the FDI ban on multi-brand retail trade, the
only viable avenues available to foreign retail players is to
enter into license agreements with Indian corporates to enter
the India market.
GOI has proposed the opening up of the multi-brand retail
trade sector to foreign equity participation, to permit foreign
retailers to enter the country through joint ventures for
The proposals, which are still at the drawing board, would,
if implemented, require the foreign partners to carry on their
operations within the framework of stringent guidelines.
Foreign investors would be permitted only small equity
participation, a limited management role in the new India
venture, restricted board representation, etc. Furthermore,
prior approval of GOI would have to be obtained in the event
the formats of the existing ventures were changed or new
ventures were undertaken.
The proposed structure could prove to be a beneficial move
to spearhead trade in this sector, particularly with
conglomerates like Tesco, Wal-Mart and Carrefour having
recognized the potential of the USD 330 billion Indian retail
industry estimated to grow to USD 427 billion by 2010 and USD
637 billion by 2015.
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