The finance ministry has approved the draft cabinet note that seeks to allow up to 51 percent foreign direct investment (FDI) in multi-brand retail, sources said Thursday.
The ministry has also approved the proposal to enhance the limit of foreign equity investment in single-brand retail to up to 100 percent from the existing 51 percent, an official in the North Block said.
India currently allows up to 51 percent foreign direct investments in single-brand retail and 100 percent foreign direct investment in cash and carry wholesale trade. No overseas investment is allowed in multi-brand retail.
In July this year, a committee of secretaries headed by Cabinet Secretary Ajit Kumar Seth had given in-principle approval for allowing up to 51 percent FDI in multi-brand retail and also removing the limit on single-brand retail.
The committee has suggested to put a minimum FDI cap of $100 million for foreign equity investment in multi-brand retail.
Subsequently, the department of industrial policy and promotion (DIPP) circulated a draft cabinet note to seek inter-ministerial views on the issue.
The government decision to allow FDI in multi-brand retail will pave the way for the global retailers like Wal-Mart, Carrefour and Tesco to enter the India's multi-brand retail market.