Financial Daily from THE HINDU group of publications
Friday, Oct 28, 2005
Financial Daily from THE HINDU group of publications Friday, Oct 28, 2005 |
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Politics Marketing - Retailing Industry & Economy - Disinvestment Left reiterates opposition to FDI in retail — Divesting `small portions' of non-navaratna PSUs discussed Our Bureau
COORDINATION RESUMES: The Union Finance Minister, Mr P. Chidambaram, with the CPI leader, Mr D. Raja, after attending the UPA-Left co-ordination meeting in New Delhi on Thursday. - V. Sudershan
New Delhi , Oct. 27 ENDING its four-month-old boycott of the coordination mechanism with the United Progressive Alliance (UPA) Government, the Left parties on Thursday returned to the discussion table and immediately held out a firm message that they would oppose moves to permit foreign direct investment (FDI) in retail trade. In a detailed note submitted at the meeting, the Left parties expressed apprehensions that opening up the sector for foreign investment could lead to job losses and also affect small traders. On the other controversial issue regarding PSU disinvestment, the dialogue with the Left focused on possible dilutions of "small portions" of the Centre's holding in non-navaratna public sector undertakings. Briefing newspersons on the UPA-Left Coordination Committee meeting, the Finance Minister, Mr P. Chidambaram, said the Government would reply to the paper submitted by the Left on FDI in retail after studying it. Mr Chidambaram said, "Disinvesment of small portions of Government equity in non-navaratna profit-making public sector enterprises was discussed. Further discussions will continue," he said. Passage of Bills: The Government has sought the support of the Left parties for the passage of the Pension Bill and certain amendment to the banking laws. In the note on FDI, the Left parties have said, "Allowing FDI in retail trade would have negative impact on the already grim domestic employment scenario. Since employment generation was the cornerstone of the common minimum programme of the UPA, inviting foreign capital in sectors, which would have a debilitating impact on domestic employment would go against the spirit of the CMP," the paper has said. "FDI in retail is fundamentally different from greenfield foreign investment in manufacturing. While the latter enhances the economy's productive base, enhances technological capability and generates employment in most cases, entry of multinational chains has few positive spin-offs," it said. MNCs `predatory': Advocating "great caution", the Left parties have said that multinational retail chains adopt predatory pricing to wipe out domestic trade. "Using their deep pockets multinational retailers can under-price domestic retailers, thus pushing them out of business. "However, once these multinational retailers capture a sizeable market share the consumers are going to be squeezed as well," the paper has said. Domestic capital should be used to expand retail trade in India. "Organised retail in India is growing at a fast pace anyway and there is no dearth of indigenous capital," the Left parties have said. The UPA-Left Coordination Committee meetings had come to an abrupt halt on June 26 after the Left parties objected to the Government's moves to offload 10 per cent stake in BHEL.
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