The Finance Ministry has given its consent to the draft Cabinet note on opening the multibrand retail to foreign investment, an official said.
"Finance Ministry has given concurrence to the proposal of the Department of Industrial Policy and Promotion (DIPP) on allowing FDI in multi-brand retail sector," a senior ministry official said on Thursday.
The DIPP had earlier circulated a draft Cabinet note to seek inter-ministerial views on the politically sensitive issue.
The note was in line with the recommendations of the high level committee of secretaries (Cos), headed by Cabinet Secretary Ajit Kumar Seth.
The CoS had recommended 51 per cent FDI in the sector with several riders. These included a minimum foreign investment of USD 100 million.
The decision on FDI in the sector has been delayed in view of concerns that it would adversely impact neighbourhood kirana shops, which account for over 90 per cent of USD 590 billion retail trade. These concerns have been voiced by several political parties and traders' unions.
Besides, the government is also contemplating to hike the ceiling of FDI in single-brand retail. At present, the country allows 51 per cent FDI in single brand retail, 100 per cent in cash and carry (wholesale) business, but bars it completely in multi-brand retail.
Several global retailers like Wal-Mart and Tesco are waiting in the wings to entry into India's multi-brand retail segment.