Govt says no plan to change FDI policy in retail

NEW DELHI (Reuters) - The government has no plans to change the present policy on foreign direct investment in retail, as it seeks to safeguard small retailers from adverse impact of growing organised retail, the minister of state for trade told lawmakers on Monday.

Retail trade in India is estimated to grow at 13 percent annually to $590 billion by 2011/12 from $322 billion in 2006/07, Jyotiraditya Scindia said in a written reply to parliament.

"Government is fully committed to securing the legitimate interests of all stakeholders engaged in the retail business," he said adding the share of organised retail in total retail has grown to 4.1 percent by 2006/07 from 3.3 percent in 2003/04.

In May, a parliamentary panel asked the government to ban foreign firms and big domestic corporates from retailing groceries, fruits and vegetables, and stop issuing licences for wholesale operations.

Currently, Indian does not allow foreign direct investment in retail trade except for single brand products, where FDI up to 51 percent is permitted with prior government approval.

The entry of foreign firms and domestic corporates in retail sector has been opposed by political parties and small traders' organisations leading to violent protests in some cities.

Policy makers say retail is the second largest employer after agriculture and the government does not want to antagonise the labour-intensive sector, particularly at a time when the economy is facing a slowdown.

Scindia also said there was no proposal to implement full capital account convertibility as of now.