The government is planning to set the ball rolling on allowing 51 per cent foreign direct investment (FDI) in multi-brand retail as soon as the Presidential poll is over next month. According to officials in the Department of Industrial Policy and Promotion (DIPP), it has completed all the pertinent meetings with the stakeholders, including the states. The decision has already received the Union Cabinet’s approval; only the notification part is left.
A senior DIPP official said today that the decision had already undergone the “most difficult” part: getting the Cabinet approval. “We would just need to notify the decision now,” he told Business Standard. “All the state governments have been duly informed of our intention. Those states which want this to happen will welcome the retailers; those who oppose it will stay away. The state governments will only grant the necessary licences for the opening of the stores.”
Last week, commerce, industry and textile minister Anand Sharma had written a firm letter to all the chief ministers on the manner in which the policy would roll out.
He especially reached out to the non-UPA states to garner their support in allowing 51 per cent FDI in multi-brand retail. The decision to relax FDI norms in multi-brand retail was suspended last year even after the Cabinet gave its nod in November.
This was due to stiff opposition from the Trinamool Congress, a leading UPA ally led by West Bengal chief minister Mamata Banerjee.
Sharma now has sought support from three chief ministers: Naveen Patnaik (of Odisha), Parkash Singh Badal (Punjab) and Akhilesh Yadav (Uttar Pradesh) to realise the potential of such a decision, and the benefits it would bring in the near future to the states.
“Now you have a fairly good number of chief ministers who have come out in support.... We have continued a dialogue in a democratic spirit, a very open dialogue with the states,” Sharma said yesterday. “Things will move...a decision has been taken. It was paused only for a larger consensus. The government has been very sincere. What we said was that we will have more consultation and we have been doing that since then. And I am very positive and much reassured by the understanding that has come from large states and the highest level of leadership.”
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The minister indicated that some states might not allow the entry of foreign retailers, but aid the policy should be rolled out for those states which wanted FDI to come into the country. Recently, Assam chief minister Tarun Gogoi had asked Prime Minister Manmohan Singh to implement the decision to allow foreign investments in the multi-brand retail sector.
The government’s taking the bold step of hiking petrol prices has given a fresh lease of life to the moods for pushing ahead major reform exercises like FDI in multi-brand retail, estimated to be a $550 billion market in India. For the last couple of months, the government had been holding several consultations on this matter with the farmers associations and consumer bodies across the country.
Indian retail majors such as Future Group and Shoppers Stop have favoured FDI in multi-brand segment, as they view this as a win-win situation as capital from overseas would help in improving back-end supply chain. Some of the international retail juggernauts that are waiting to enter the Indian market are Carrefour, Walmart and Tesco.