‘No FDI in multi-brand retail for now’

The BJP-led Government at the Centre seems determined to stick to its pre-poll promise of not allowing foreign direct investment in the multi-brand retail sector — a move that may not find favour with its foreign trade partners, including the US and the EU.

“At this stage, the party’s position is very clear. It (multi-brand retail) probably is not best opened up now because the medium and small-sized traders and farmers have not been adequately empowered to deal with it. So immediately if you open up the floodgate of FDI, they may get affected,” Minister of State for Commerce & Industry (Independent Charge) Nirmala Sitharaman told media persons after taking charge on Tuesday.

Job creation Sitharaman also talked about the need to frame policies that would lead to creation of jobs for both skilled and unskilled people and boost exports.

Exports have decelerated considerably over the last two years as global demand contracted due to economic slowdown.

There have been speculations both within the Commerce and Industry Ministry and industry about the possibility of the BJP not fiddling with the current policy of allowing 51 per cent FDI in the multi-brand retail sector as it may dent its image as a reform-oriented Government.

Pressure from partners Moreover, the Government would also face pressure from important trading partners such as the US and the EU if it reverses its policy of allowing FDI in the sector as a number of American and European companies such as Walmart, Tesco and Carrefour are eyeing the Indian market with interest.

British retailer Tesco is the only company that has announced its plans of entering India in collaboration with the Tata Group. But it has not acted on its plans as it wanted to be sure what the new Government had in mind.

While the Minister did not clearly state if the policy framed by the UPA Government on allowing FDI in the multi-brand retail sector will be reversed, she said she would hold discussions with officials based on what the party manifesto had said on the matter.

Interestingly, the BJP’s election manifesto categorically talked about not allowing FDI in multi-brand retail.

Specialised expertise “Barring the multi-brand retail sector, FDI will be allowed in sectors wherever needed for job and asset creation, infrastructure and acquisition of nice technology and specialised expertise,” it said.

On the issue of allowing FDI in other sectors such as the Railways, e-commerce and construction development, Sitharaman said that the Government will look at FDI in various sectors in a calibrated fashion.

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