FDI in multibrand Retail earlier cleared 100 per cent FDI in single brand retail, though there have been few takers for it; it has now gone ahead with 51 per cent FDI in multi-brand retail. This means that any global giant investing in the country would have to first tie up with a local partner, new or existing. Little wonder then that stocks of companies engaged in the retailing business are zooming. It, however, might not be as simple as it seems. The devil as they say lies in the detail. We take a closer look at the notification issued by the Department of Industrial Policy & Promotion (DIPP) with regard to multi-brand retail.The notification says that FDI will be permitted subject to certain conditions. Here are some of the main conditions cited:

• Minimum amount to be brought in as investment by the foreign investor would be $100 million. At least 50 per cent of this amount should be invested in ‘back-end’ infrastructure, which will include investments in processing, manufacturing, distribution, design improvement, warehouse, logistics, storage, etc. Investment in rentals and land cost will not be counted.
Little money will thus be available for the existing listed retailers to bring down their debts, which is a bigger worry for almost the companies. The government is sending a clear signal that the funds are to be deployed for asset creation.

• At least 30 per cent of the procurement of manufactured/processed products purchased shall be sourced from small industries with investment in plant and machinery not exceeding $1 million.
The investment limit will restrict purchases of smaller items. Electronics, garments, kitchenware, sports goods, consumer goods and most of the other items will not fall in this list. This would largely leave groceries and smaller gift items to be sourced from Indian players.

• Retail sales outlet may be set