 "Commerce Ministry yet to take legal opinion on FDI in multibrand retail")
A month after Delhi chief minister Arvind Kejriwal decided to withdraw the foreign direct policy (FDI) in multibrand retail, the ministry of commerce and industry is yet to take a legal opinion on the matter.
The Department of Industrial Policy and Promotion (DIPP), the nodal division for all FDI-related matters, is presently working on preparing a self-contained note that will be sent to the legal affairs department of the ministry of law and justice.
The note, which is under works, is going to specifically seek legal opinion on what can be in case a state government decides to withdraw its earlier decision of allowing FDI in multibrand retail.
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“This is because, as per the present policy, there is no clear policy measure that enables its withdrawal,” a senior ministry official told Business Standard.
It seems although DIPP is expediting the process, the main issue here is where is the so-called exit route that a state government can exercise if it is against allowing foreign retailers to set up megastores in their states.
One option could be not granting licenses to a foreign retailer who intends to set up their shops in that particular state where it is not allowed, the official said.
Post the decision taken by the Aam Aadmi Party, the Vasundhara Raje-led BJP government in Rajasthan also took the same decision early this month.
So far it is only British retail giant Tesco has decided to enter India by partnering with Tata Group’s Trent Hypermarkets. It has plans to set up stores in Western and Southern India. But, not a single retailer has expressed even a desire to go to Rajasthan or Delhi.
Following the upheaval, commerce and industry minister Anand Sharma has clearly stated that the “policy cannot be reversed” once implemented and that the FDI policy is “not a revolving door.”
Contrarily, the policy states that it is “an enabling policy only and state/UT governments would be free to take their own decision in regard to implementation of the policy. Therefore, retail sales outlets may be set up in those states/UTs which have agreed, or agree in future, to allow FDI in MBRT under this policy.”
So far, 12 states and UTs had agreed to implement the policy, the majority under Congress rule — Andhra Pradesh, Assam, Haryana, Uttarakhand, Maharashtra and Karnataka, among others. Some of these are headed for elections in a few months, such as Andhra, Haryana and Maharashtra.
According to CII President S Gopalakrishnan, an estimated 10 million jobs would be created in the retail sector, many of which would be accrued to the respective states that allow the policy.