Besides tweaking rules for several areas of the real estate sector, following a series of liberalisation efforts earlier this year, the Indian government is now looking to ease FDI restrictions for the recently opened food retail by allowing stores to sell non-food products up to a certain value. While a formal review of the rules is yet to be conducted, discussion within the government has begun, especially for the food retail segment, where the food processing ministry has been pushing hard to allow 15 to 20 per cent sales to come from household products such as soaps, toothpaste, or kitchenware.
"We are examining the issues but there is no formal proposal yet," said a source. The Modi administration has moved cautiously on the front, given it considers traders as a prominent constituency. With elections looming in crucial states like Uttar Pradesh, Punjab and Gujarat, it remains unclear if the government was willing to take a political gamble.
In the case of real estate, the government is toying with the idea of tweaking rules to ensure that companies like Chinese construction giant Dalian Wanda Group are able to move ahead with their proposed investment of nearly $10 billion. Under the existing rules, development of townships is not allowed. Sources said restrictions on transfer of undeveloped land are being reviewed as there are takers for it. They also said that there may be other rules that could be reviewed as part of a comprehensive exercise but the details are yet to be worked out.
Although companies such as Walmart are studying similar formats in Latin America, industry sources said, an Indian buyer would prefer going to a store where she can buy goods that meet his/her daily requirement for all household items and not just food. Even at that time the food processing ministry had argued that these stores be allowed to sell personal care and non-food products required by households on a daily basis. Food processing minister Harsimrat Kaur Badal's proposal, however, did not find favour with others in the government.
