The Hindu Business Line : Policy on FDI in retail, realty soon: Kamal Nath

The Union Minister for Commerce and Industry, Mr Kamal Nath, being greeted by Mr Michael Wattleworth, Sr. Resident Representative, IMF India (right), and watched by Mr George Deikun, Mission Director, USAID, at the Indo-US Summit in the Capital. - Kamal Narang

New Delhi , Feb. 9

THE Government on Wednesday said that it would finalise a policy on attracting foreign direct investment in the retail and realty sectors in the next two months.

"We are examining various parameters. We should be able to come up with a policy in the next two months," the Union Commerce and Industry Minister, Mr Kamal Nath, told reporters on the sidelines of the Indo-American Chamber of Commerce summit on infrastructure here.

"We have had discussions with the retail sector. We want incremental FDI to come in to the sector. We do not want FDI which would displace the existing investment," he said.

When asked whether FDI in retail will form a part of India's offer on services at the WTO, which have to be tabled before May 31, Mr Kamal Nath said: "Our offers in Mode 2 and 3 would be driven by offers we receive in Mode 1 and 4."

For supply of services, Mode 1 is for cross-border supply (for example, business process outsourcing), Mode 2 is investing overseas (foreign banks), Mode 3 is consumption of service abroad (tourism, education) and Mode 4 is movement of natural persons.

The Minister said while the policy may be a part of the offers it was not driven by the offers. The FDI in realty should be driven towards construction and not just investment in land holdings and the policy would aim to address this, he stated.

Earlier in his inaugural address at the summit, Mr Kamal Nath called for increased FDI in the infrastructure sector, which formed the `backbone' of any growing economy.

In particular, he asked investors to look at areas such as power, highways, roads, seaports and telecom.

Besides the many advantages that India offered, 77 per cent of foreign investors in the country were making profits while another 9 per cent were breaking even. "Returns on investment in India is very good comparable with those prevailing in any other country," he said.

Recognising the growing role of trade and the need for creating trade-related infrastructure, the Government has decided to promote setting up of free trade warehousing zones where FDI, up to 100 per cent, would be allowed which would be entitled to get all the benefits available to the special economic zones, he said.

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