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India allows 100% FDI in retailing of food products manufactured locally

FBR Staff Writer Published 29 February 2016

India has cleared 100% foreign investment multi-brand retail of food products which are manufactured and marketed in the country.

The clearance has been announced during the Budget 2016 which would allow foreign investment in food multi-brand retailing in the food processing sector aiding the creation of infrastructure, revenue and betterment of farmers.

The move would also help international food retailers such as Marks & Spencer, Tesco, Walmart, set up food-only retail outlets in the country.

The strategy is also aimed at reducing food wastage, farm diversification, along with encouraging global companies to produce locally rather than import items from abroad.

The Hindustan Times reported that the announcement follows a letter that food processing minister Harsimrat Kaur Badal had written to Prime Minister Narendra Modi in January urging the government to have a "relook at our FDI policy in multi-brand retail in food processing as a part of the Make in India initiative so that both farmers and consumers will benefit and which will result in creation of critical infrastructure."

Since 2013, India began allowing up to 51% FDI in multi-brand retail as per the policy announced by previous government.

As per the policy, it had conditions such as 30% mandatory local sourcing, $100m upfront investment and half of it in backend infrastructure, reported The Economic Times.

The new policy enables retailers to sell their own food products without restrictions as long as the items are produced within the country.