France wants a bigger pie of India's retail sector

Accord on construction of two N- reactors

The demand for further liberalisation of India’s retail sector came up during the French finance minister’s parleys with her Indian counterpart as part of the ongoing four-day visit of French President Nicolas Sarkozy to the country.

Among a series of agreements reached between the two countries on Monday included the much-awaited framework agreement for construction of two 1,650 MW nuclear reactors in Maharashtra. The Indian Space Research Organisation (ISRO) and French space studies centre inked an agreement for research in earth system science and climate.

On the diplomatic front, signalling a new bonhomie between the two countries, Prime Minister Manmohan Singh termed France as one of the most important and reliable defence partners of India at a joint press conference with the French president.

The two countries are likely to ink deals for a joint missile development and upgradation of Mirage-2000 jets. Singh also thanked Sarkozy for the continued French support to India’s bid for a permanent seat on the UN Security Council.

Business first

However, the primacy of an increased trade and business relationship with India was evident in the French demand for further opening up of sensitive segments of the economy like retail and insurance.  

“We would like further liberalisation of segments like retail and insurance for (overseas) investment. This would bring in more foreign investment and create employment,” said the French Minister of Economy and Finance Christine Lagarde after her talks with Finance Minister Pranab Mukherjee and Minister for Commerce and Industry Anand Sharma here.   

Lagarde, who is accompanying Sarkozy specifically emphasised on allowing FDI in multi-brand segment of the retail sector.

In response, Sharma said the government was exploring scope for further opening up of the retail sector.

“In a democracy, while taking a policy decision we will have to consider views of all stake holders and take a final view. India has already allowed FDI in the single brand retailing. We are for further liberalisation,” Sharma, who also addressed newspersons, said.

Earlier while addressing an interactive session at the Indo-France Business Forum (IFBF) organised by FICCI Lagarde said: “The € 10 billion commitment by French firms to invest in India by 2012 could be a lot more if opportunities come up by the opening of insurance and multi-brand retail. French companies would respond in a rigorous manner. Everything is about give and take and it is a two-way street,” she told the IFBF attended by CEOs of leading French and Indian firms.

Planning Commission Deputy Chairman Montek Singh Ahluwalia, who also addressed the IFBF, said the debate on opening of the insurance sector had been initiated through a Parliamentary process and many arms of the government, including the Planning Commission, were supportive of opening multi-brand retail to FDI.

Later in the day during delegation-level talks with the Ministry of Commerce and Industry, Lagarde said France would aim to step up its bilateral trade with India to $12 billion  by 2012. She identified sectors like civil nuclear energy, infrastructure, food processing, pharmaceutical and education as priority areas of Indo-French cooperation.