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Thursday , January 26,  2006

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   India Allows 51% Retail FDI

 

The Federal Cabinet approved foreign direct investment (FDI) of up to 51% in retail business. However, they did not open up investments for companies that ran multiple brands and did not promise if and when that may open up either. Opening up retail is sensitive to the communists who support the Government. Communists think that investments in retail will wipe out traditional businesses that do not form their support base. However, are still philosophically against capitalism and they think that capitalists will profiteer on India’s poor. The Government opened up 100% FDI in infrastructure areas like airports, gas pipeline construction, power trading, exploration for diamonds, distillation, brewing potable alcohol, industrial explosives, and hazardous chemicals. It also abolished requirements to seek Government approval for projects away from urban areas. On the agriculture side, it will allow 100% FDI in and processing and warehousing of rubber and coffee but disallows any investment in coffee and rubber plantations. Several multi-national companies (MNCs) have already set up modern labs and have completed preliminary analysis of potential sites to mine for gold and diamonds. They are sought a “prospecting license” from the Karnataka Government.










 


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