By IANS,
New Delhi : The new foreign investment norms will not extend backdoor entry for foreign retailers, Commerce and Industry Minister Kamal Nath said Friday, defending the clause that does not count minority overseas stake in a holding company as foreign equity.
The minister said there was no change in India’s retail trade policy that permitted foreign equity only for single-brand companies and cash and carry wholesale businesses.
“Foreign direct investment is allowed only through downstream companies,” the minister said referring to blanket permission for global chains like Wal-Mart, Carrefour and Tesco to set up cold chains and backend operations apart from giving logistical support to domestic entities.
“Today, if any retail company in India wants, they can issue GDR (global depository receipts) and ADR (American depository receipts) up to 49 percent of their equity base,” Kamal Nath said.
Earlier, addressing a luncheon session on the concluding day of the 81st annual general meeting of FICCI, Kamal Nath said that while the government was monitoring the credit availability situation, it was important for the banks to lend.
“The RBI (Reserve Bank of India) is taking steps to ensure that it becomes attractive for the banks to extend credit to industry,” he said.
Kamal Nath expressed confidence that in spite of some loss in the growth trajectory, domestic demand was still strong, evidenced by the per capita consumption. This provided an opportunity to Indian businesses.
Asked about the impact of protectionism in the west on trade talks, Kamal Nath said: “The Doha round must not perpetuate the flaws and distortions in trade and all countries needed to abide by the multilateral rule based trading system. If other countries don’t go by the rules, India would be forced to do the same.”
On the issue of subsidies by China for making its products competitive, he India was watching the situation and “would not fight shy of applying the safeguards, imposing countervailing and anti-dumping duties to ensure a level-playing field for our industry”.