No change in retail policy - FDI still not allowed

(2/6/09 Retail policy updates) - Ruling out any "review" of the foreign direct investment policy, Commerce and Industry Minister Anand Sharma has said there are in-built safeguards against FDI finding its way into multi-brand retail and breaching caps in broadcasting and defence production.

Sharma, who took charge of the nodal ministry for FDI on May 29, said there is no need for a relook at the policy amended in February by the Department of Industrial Policy and Promotion (DIPP).

"At this stage, we don't see that the time has come for any comprehensive review . it is too early in the day . we will see how the new policy is working," Sharma told in an interview.

There are safeguards against FDI in sensitive sectors like broadcasting and defence production, while the policy does not allow overseas investment in retail, he said. The "misunderstanding" on FDI being allowed indirectly in multi-brand retail "is not well placed at all", he said.

He said there were "effective, inbuilt safeguards when it comes to the sectoral caps, particularly in those sectors which have been sensitive, and (going) by the new policy those areas remain protected ..."

While the policy does not allow overseas inflow into this sector, the changes in February were perceived to be opening the sector to FDI up to 49 per cent in an Indian firm that has a downstream subsidiary firm in retailing.