New Delhi : The government’s move to allow 51 % FDI in multi-brand retailing will attract investments of USD 2.5-3 billion in retail sector in next five years, Crisil Research said in a report today. “The decision to allow 51 % FDI in multi-brand retail will result in investment of USD 2.5 billion-USD 3 billion in the retail sector over the next five years, primarily into the food and grocery vertical,” the report said.

Capital expenditure in the back-end supply chain will receive a boost given the mandatory 50 % investment clause, it said. An efficient supply chain will enable direct sourcing of fruits and vegetables which will boost farmers realisations by 10-15 % and bring down prices by 15-20 %.

It further said the policy reforms initiative by the government has lifted the business confidence. “Upward adjustment of diesel prices is inflationary in the short run but lifts business confidence by reducing fiscal stress and inflation in the long run. It thus paves the way for rate cuts by RBI” Crisil Senior Director and Chief Economist D K Joshi said.            (PTI)

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