Foreign multi-brand retail companies should wait till the formation of a new government at the Centre before investing, said senior Bharatiya Janata Party (BJP) leader Yashwant Sinha.

The remarks of Sinha, a former Finance Minister in the National Democratic Alliance (NDA) Government, come after the first foreign direct investment (FDI) proposal of British retail major Tesco got the Foreign Investment Promotion Board’s approval last week.

The Government opened up the sector in September 2012. However, the BJP, the principal Opposition party, is against this policy.

“My advice to foreign multi-brand retail companies is that that they should not hurry. The country is going to face a general elections in April-May. Before they (foreign companies) operationalise anything, they should wait for the new Government to clarify this policy. It would be safe for them. But given the strong position that BJP has taken on this issue, it would be very difficult for me to say that we will go along with any approval being given at this late stage by the (UPA) Government,” Sinha told Business Line .

Tesco plans to pick up 50 per cent equity in Tata group company Trent Hypermarket with an investment of $110 million (around Rs 680 crore). The proposal got the inter-ministerial panel’s nod in just 13 days after filing the application. Now, one or two more FDI proposals in multi-brand retail are expected to be made in the coming days.

This FDI policy is an enabling one, which means it is up to the States to permit foreign players to set up shop. Although the notification listed 12 States and Union territories in favour, after the Assembly elections this number has fallen to 10, as the new Governments in Rajasthan and Delhi are opposed to FDI in multi-brand retail.

Current account deficit On the current account deficit (CAD), Sinha criticised the way it was being brought under control.

“I have no doubt that just like fiscal deficit is artificially compressed, the CAD will also be controlled in that manner. For instance, imposing 10 per cent duty on gold and putting all kinds of impossible conditions. Gold imports have gone down and it is being smuggled. So, this is not a real reduction,” he said, adding that it was only that (gold) which was not coming legally was not being reflected in the official account.

CAD was earlier projected at 3.7 per cent of GDP or $70 billion. Later, the projection came down to $60 billion and further to below $50 billion.

Sinha said this was a temporary situation would not help unless there was a real reduction in CAD.

He also suggested more production of coal rather than importing it.

“I represent an area full of coal (Jharkhand). I can tell you that coal mines have been kept closed without any reason. One inspector of police decides that coal mines will remain closed and it is closed down. This is the situation. The State governments are least concerned and we are importing coal,” he said.