The Hindu Business Line : `BJP favours allowing FDI in real estate, retailing'

THE Bhartiya Janata Party (BJP) is in favour of throwing open the real estate and retailing sector to foreign direct investment (FDI). In the case of real estates, there are no stumbling blocks ahead though for the retailing sector the opening up would be conditional.

The convenor of the Central Economic Cell of the BJP, Mr P.N. Vijay, told Business Line, "In the case of FDI in real estates there are no stumbling blocks. Now the question is just when to do it. In our view it should be done in the very first year itself if the NDA Government comes back. As of now FDI is allowed in building up township but it has not really taken off."

"Moreover, unless FDI is allowed in real estates we cannot meet the demand for our housing needs as the domestic developers may not have that much financial strength,'' he said.

The other apprehension that was taken into consideration by the party was the possibility of flight of capital because FDI in real estates would have to be permitted on a repatriable basis. "But the apprehension of flight of capital are a lot less now as we are in a better situation," he said.

But in the case of allowing FDI in retailing, first the fears of the business community have to be dispelled. "Wherever FDI has been allowed in retailing it has benefited. But we have to allay the apprehensions of the trading community. Unlike real estates, we have to look at the retail sector in a more holistic approach," Mr Vijay said.

"There had been the NK Singh Committee recommendations from the Planning Commission which is entirely an economic exercise. But we as a party have to consider the political implications, which is why we are here in a political party. And yes, there will be implications," he said.

Explaining the implications, he said that unlike other sectors FDI in retailing has a social impact. On one side the buyers may benefit while the sellers would fear of losing business to the big retail chains that could sell it cheaper and make profits because of scales.

And because it would impact only the top end, the party's thought is to put in place certain conditions like having a minimum investment of $50 million or $100 million to deter small players as a flood of them could impact market dynamics and confine these investments in the metro cities only.

"What we need to do is to decide on the process by which we should bring in FDI in retailing. And if we come back to power these steps would have to be taken within the first two years though real estates are likely to be opened up sooner than retailing," Mr Vijay said.

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