The government will examine investment norms for the retail sector in other countries before finalising a policy to allow foreign investment in the branded retail segment.

According to estimates by the International Trade Promotion Organisation, 150 million sq ft of retail space is available in the country.

"We are looking at the policies in other countries, including China," a senior government official told Business Standard.

Commerce and Industry Minister Kamal Nath had recently announced that the government was willing to open up the branded retail sector for foreign direct investment.

Though the government has only now voiced its intention to consider opening up the retail sector, the issue has been in discussion within the government departments for quite some time. Officials said the core group of secretaries had, in January this year, asked the department of commerce to come out with a paper on the retail sector.

The department had subsequently circulated the paper for discussion. "The paper had been sought to clear the position on the policy with regard to wholesale cash and carry vis-a-vis retail, since some cases had come before the foreign investment promotion board," an official said.

German retail giant Metro AG is one such instance.

The FIPB had initiated an internal inquiry earlier this year to see if the company was indulging in retail trade rather than wholesale cash and carry for which it had been granted permission.

Other instances are the buyer-seller portals, like Bazee.com or E-bay. "While we consider only B2B (Business to Business) as e-commerce retail, many countries in the European Union regard even B2C (Business to Consumer) as retail," an official said.