Contrary to industry expectations, India will not allow multi-brand retail by foreign companies nor will it allow any surrogate entry via B2B (business to business) for multi-brand retail, the country's Commerce and Industry Minister Piyush Goyal, said on Wednesday.
The minister made the remarks after an interaction with representatives of various associations, traders and retailers - considered an important vote bank of the ruling Bharatiya Janata Party (BJP).
Goyal further said "predatory pricing will not be allowed and necessary action will be taken against defaulters" - something that many e-commerce websites which have been giving huge discounts may find disconcerting.
Indian industry was looking forward to a total shift in policy from the Narendra Modi-led government in its second stint after a landslide victory in the recently concluded elections.
In fact, with the country's annual budget slated to be presented on 5 July, business bodies such as the Confederation of Indian Industry (CII) and The Federation of Indian Chambers of Commerce and Industry (FICCI) had presented Pre-Budget Consultation proposals to the government, seeking 100% entry into multi-branded retail by foreign players.
"In line with 100% foreign direct investment in food retail, a similar policy could be considered for multi-brand retail in products that can be fully manufactured in and sourced from India," the FICCI said.
Currently, any foreign firm cannot make an investment beyond 51 per cent in the multi-brand retail sector as per the rules outlined by the Indian Commerce Ministry.
The rule also imposes several conditions on foreign players related to mandatory sourcing of goods from small and medium scale sectors. Many foreign firms have found this to be a major barrier.
So far, only the UK-based Tesco supermarket chain has received approval, way back in 2011, for opening stores under the multi-brand retail policy in India.