India poised to relax laws on foreign direct investment

The Indian government could be poised to open the door to foreign direct investment (FDI) in the country, in a move that could have huge ramifications for the ambitions of companies, including Tesco and Wal-Mart, in the burgeoning Indian economy.

Speculation is mounting that a relaxation of FDI rules may be forthcoming after the Indian Ministry of Commerce issued revised guidance on what constitutes a foreign holding in an Indian company.

Under the new guidelines, as long as a company is more than 50 per cent-owned by Indians, the government would consider any investment into that company to be Indian equity, regardless of whether the sector is one in which FDI has been capped, such as multi-brand retail. Current FDI rules only allow single-brand retailers, such as Germany's Metro, to open stores, while multi-brand retailers, such as Tesco and Wal-Mart, are only allowed to deliver supply chain and back-office services.

More from this article at The Independent