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FDI: Entry and ownership rule
On 25 May 2010, it was reported that the Commerce and Industry Ministry, Government of India was likely to propose 100% foreign direct investment (FDI) in multi-brand retail. The Department of Industrial Policy and Promotion (DIPP) is currently preparing the background document for this policy. They will also suggest stiff local sourcing requirements and mandatory investments in backward linkages. It is expected that it will be mandatory for big multi-brand foreign retailers to create a back-end cash-and-carry for small shopkeepers, giving them benefit of scale on the sourcing side.
On 14 September 2012, FDI in multi-brand retail was allowed, but only at 51%, contrary to the previous plans. Also, the decision whether or not to allow the setting up of such stores rests at the state level, so FDI-funded multi-brand retail stores may continue to be disallowed in certain Indian states. Further, restrictions were added on the use of such FDI.
On 7 December 2012, the ruling was backed by parliamentary vote.
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