RAS question
FDI in multi-brand retail is capped at:
Correct answer: (A) 51%.
FDI in multi-brand retail trading in India is capped at 51% under the Government route.
Explanation
Multi-brand retail trading is not treated like an unrestricted retail category. The DPIIT Consolidated FDI Policy lists Multi Brand Retail Trading with an FDI cap of 51% and the entry route as Government, which means foreign investment up to that ceiling needs Government approval. The same policy section says FDI in multi-brand retail trading is permitted subject to conditions, so the number is not a general retail liberalisation figure but a specific cap for this category. One key condition retained in the exam explanation is sourcing: at least 30% of the value of procurement must come from Indian micro, small and medium industries and small industries.
Why the other options are wrong
- (B) 26% understates the permitted cap, because the DPIIT policy table specifies 51% for Multi Brand Retail Trading.
- (C) 100% is wrong because multi-brand retail trading is permitted only up to a capped 51% and through the Government route.
- (D) 49% is below the actual policy cap; the relevant entry allows FDI up to 51%.
Concept
This tests FDI policy in the retail sector, especially the difference between a sectoral cap and an entry route. It recurs in RAS economy questions because retail FDI combines liberalisation with explicit policy conditions.