The Supreme Court on Tuesday asked the government what steps it had taken to protect small traders, whose business would be affected when multi-national retail chains enter the country following the parliamentary sanction for foreign direct investment in retail.
A bench consisting of judges R M Lodha and S J Mukhopadhaya was hearing a public interest suit, moved by a lawyer, challenging the government’s attempt to bring in FDI in retail. The judges asked the government to protect the small traders. They said that big foreign firms were likely to lower prices initially to attract customers and elbow out the neighbourhood shopkeepers in the process. After that, they could monopolise the sector. The judges wanted to know what the government had done after the passage of the law. “Is it all a political gimmick?” they asked.
Attorney General G E Vahanvati assured the court that Parliament had already discussed the issue of protecting local traders and both Houses had passed the law after extensive debate. This was part of the economic reforms of the government and not a gimmick, Vahanvati told the court. Investments are indeed coming, he said.
There are several safeguards against big retail chains acquiring monopoly status. The Competition Commission of India, for instance, is a watchdog, he added.
The apex court said that its intention was not to interfere in economic policy matters, but whatever steps the government took must be within constitutional parameters.
The court asked the government to state on affidavit what protection it would give to the small traders and how its assurance would be implemented. The government was asked to file its reply within three weeks.