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Retail awaits FDI in personal care products

The government eagerness to allow retail of personal care items has gained momentum with the next set of foreign direct investment (FDI) reforms likely to permit the sale of such India-made products to the extent of 25% of total merchandise sales, said sources, adding the government had in 2016 allowed overseas retailers to sell food products manufactured locally but they lobbied to be allowed to carry more items of daily use in order to make such outlets more viable. The ministry concerned, including finance and food processing along with the Department of Industrial Policy and Promotion are deliberating on further opening up of the food retail sector. DIPP, the nodal department for the FDI policy, will finalise the contours of the broad policy changes and float a cabinet note thereafter. DIPP has for the first time endorsed the proposal to allow retail of personal care products alongside food items by foreign retailers, a suggestion originally mooted by the food processing ministry. While a political consensus needs to be reached for further opening up of the retail sector, the government is also examining the proposal of opening up FDI for all goods manufactured in India. If approved, the move could usher in major reforms in India’s FDI regime and spark a further easing of rules to allow overseas companies to sell locally made goods. It would help not only in attracting investment in retail, but also give a big boost to the Make in India program. The government wants to bolster manufacturing as part of its job-creation strategy. The government has not yet decided and still to make up its mind about easing the rules for personal care items. The proposal is on the table and a final decision is yet to be taken.

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