India retail liberalisation: market reaction

Author: Ashley Lee | Published: 20 Sep 2012

In a raft of foreign direct investment (FDI) reforms released last Friday, India’s Cabinet announced it would permit multi-brand retail on a state-by-state basis. Here’s what it means for investors.

The new FDI norms, which have only been released via press release, allow foreign investors to own up to 51% of joint ventures in multi-brand retail. Multi-brand retailers include all retailers that sell more than one brand, including global giants such as Tesco and Wal-Mart.

Counsel assert that the changes – if they weather protests – will prove that India’s financial system is no longer afflicted by regulatory uncertainty.

The introduction of FDI in multi-brand retail was unexpected. It had been announced in November 2011, but was later retracted because of political opposition from...