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Mr. Kamal Nath, the minister was speaking at the inauguration of the
2-day Mint-Hindustan Luxury Conference 2008 in New Delhi yesterday.
"We are waiting for the report from the Indian Council of Research
of International Economic Relations, which is expected in the next 15
days," he said. 'The government will study it and respond to it so
that while we create economic activity we are able not to disturb or not
to affect the small retails."
The government had commissioned a study last year by ICRIER, a New Delhi-based
think-tank to examine the impact of large foreign retail giants on neighbourhood
mom-and-pop kirana stores in India.
He indicated a possible hike in the existing 51 per cent cap on foreign
investment in single-brand retail stores and said the government would
soon review its policy on multi-brand retailing, where foreign capital
is not allowed.
He also showed his concern at the ensuing revenue loss
because of Indians purchasing luxury brands abroad, and hinted that the
government would rationalise import duties.
"India has high tariffs and we recognise that if
you go abroad and buy, then it is a revenue loss for India. So we are
working on both duties and countervailing duties," he said. "We
also have to differentiate between high-end and low-end luxury goods."
Nath said the government would keep in mind the interests
of small manufacturers and traders. "We have to keep in mind that
97 per cent of India's retail trade is in the unorganised market. We want
to protect kirana stores, but we want to create jobs as well,"
he said.
India's retail market is estimated to be about $300 billion and is growing
at more than 20 percent annually.
Organised retail stores, such as Big Bazar, Spencer's
and Reliance Retail, account for less than 10 per cent of the market,
largely dominated by about 12 million small stores.
"The biggest fear is the fear of the unknown,"
Nath said. Two years ago, he said, when the government allowed foreign
investment in single brand retail, there was a lot criticism. But it appears
now that there has been little adverse impact on anyone, he said, adding
the same could be true for luxury goods as well as multi-brand retailing.
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