At Thursday’s 150-minute cabinet meeting, the Trinamool Congress members argued vociferously against increasing the foreign direct investment (FDI) cap in the retail sector but were overruled. The party was told that if West Bengal did not want FDI in retail, it needn’t, but it could not deprive other states of the benefits from the move.
“There were heated arguments, ” TMC sources said. “(Dinesh) Trivedi put up spirited resistance. Finally, Trivedi was told by commerce minister Anand Sharma that he had discussed the issue with chief Mamata Banerjee, and Trinamool concerns would be addressed.”
According to sources, the Congress had assured Banerjee on two counts. One, there will be provisions for states to have a right to control the retail chains. Two, individual states themselves can put forward some safeguards that address domestic interests.
It appears that at least two ministers from the Congress party had also expressed reservations on the move at the meeting.
When Trivedi arrived at 181, South Avenue, where state chief minister Mamata Banerjee had hosted a dinner with IAS officers from the state, with many of her MPs present, the atmosphere was grim. After he briefed Banerjee, she stepped out of the TMC office and said, “We are not accepting this decision. We have vehemently opposed the proposal in the Cabinet. We will convey our opposition in Parliament.”
The decision was also criticised by both the Left parties and the Bharatiya Janata Party, saying this would allow foreign cartels to manipulate the retail market and eventually push up prices. BJP leader Arun Jaitley said his party would oppose the higher FDI caps in retail both inside and outside Parliament. However, he evaded a question on whether the BJP would undo the move if it came to power.
The party said allowing foreign players to invest in the retail sector would not only lead to consolidation of domestic market in favour of foreign companies with deep pockets. It would also affect the manufacturing and services sector, which would eventually sweep aside competition and cause loss of jobs for small retailers.
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Jaitley said consumer choice require markets to be fragmented rather than consolidated. Fragmented markets give larger options to the consumers whereas consolidated markets make the consumer captive. “No one player should be allowed to dominate the market,” he added.
Another UPA ally, the DMK is also opposed to FDI in this sector. Spokesperson TKS Elangovan told Business Standard, “Our party had already taken a decision, at least two years back in its general council, to oppose FDI in multi-brand retail. DMK maintains that stand...it is bound to affect small local traders; it will wipe out all opportunities for self-employment.”
However, other ministers present at the meeting said the DMK’s representative in the cabinet, M K Azhagiri, made no mention of the DMK’s reservations at the discussion.
Senior BJP leaders argued the the country needed infrastructure to carry agricultural products to consumers and the government should create better storage facilities and cold chains, which international companies would not do.