Though India allowed Foreign Direct Investment (FDI) in what is called multi-brand retail through the joint venture route in September 2012, the FDI, even after a year, has not picked up. Discuss the reasons. (UPSC 2013)

FDI in multi-brand retail remained muted because the 2012 policy was liberal in name but restrictive in practice. Global firms found entry costs, compliance burdens and political risk too high. Heavy conditions included a USD 100 million minimum investment, with 50% of the first USD 100 million locked into backend infrastructure. A 30% local sourcing norm from MSMEs and artisans was difficult to meet. Stores were allowed only in cities above 1 million population, state consent was required, and many states opposed it. Fear of policy reversal further discouraged long-term commitments, diverting FDI to less restrictive sectors.