Kamal Nath in Mumbai on Wednesday. (PTI)

Mumbai, Jan. 19: Union commerce and industry minister Kamal Nath said here today that the government would soon decide on allowing foreign direct investment (FDI) in the retail sector.

Speaking at the inaugural session of the fifth annual Images Fashion Forum (IFF) 2005 here, the minister said, ?We will soon decide how FDI in retail can be leveraged for incremental results in the sector.?

Hinting that at least a section within retailing will soon be open to foreign investment, the minister said, ?When you talk of FDI in developing malls or the shopping sector, you won?t be disappointed for very long. We will meet and discuss this in the next couple of weeks.?

At present, FDI in retail is not permitted, even as there has been mounting pressures from the industry. However, Nath said no quantum has been decided on the amount of FDI that can be permitted or the sectors within retail. ?We will decide how FDI can be leveraged for overall increase in retail development in the country, without disrupting the existing environment,? he said.

Just like big-time retailers and wannabes, who have been campaigning for allowing FDI in retail, a large section of small and middle-rung sellers have been lobbying against it on the grounds that foreign competition would be detrimental to local people.

Nath said, ?We will have to look for India-specific solutions to develop retailing in the country.?

Images Fashion Forum, which has been organised to charter the blueprint for the future of the retail and fashion industry, has brought together some of the biggest names in the forum here.

A big section within the fashion and retail industry wants the retail sector to be under the purview of a ministry.

B. S. Nagesh, managing director of Shopper?s Stop, and Kishore Biyani of Pantaloon want the retail industry to be attached to a ministry.

However, Satya Paul managing director Sanjay Kapoor does not think government interference necessary. On his part, Nath said the industry should decide which ministry it wants to be a part of.

Nath said in India, only 2-3 per cent of retail is in the organised sector. This is as high as 85 per cent in the US. India has about 12 million retail outlets, mostly in the unorganised sector.

?There were fears of unemployment when talking about FDI in the retail sector. But the government wants to stimulate development and unleash its potential,? the minister said.