Following the Union Cabinet's approval of 100 percent Foreign Direct Investment in single brand retail, the Confederation of All India Traders (CAIT) on Wednesday strongly opposed the move, while condemning the government's "love for MNCs".
"Allowing 100 percent FDI in single brand retail through automatic route will facilitate easy entry of MNCs in retail trade of India, and will also violate the promise made by the Bharatiya Janata Party (BJP) at the time of elections. It's a serious matter for small businesses," said CAIT's National Secretary General Praveen Khandelwal.
He further said the move will result in widespread employment reduction due to the entry of an increasing number of MNCs.
"It is a pity that instead of formulating policies for the welfare and modernisation of existing retail trade, the government is more interested in paving way for the MNCs to control and dominate the retail trade of India. This love towards MNCs is highly condemned," said Praveen, adding that the chamber would soon declare its national strategy to oppose this "brutal move."
Earlier in the day, the Narendra Modi-led Cabinet declined the need for approval for FDI in Single Brand Retail Trading (SBRT).
Extant FDI policy on SBRT allows 49 percent FDI under automatic route, and FDI beyond this, up to 100 percent through government approval route. However, it has now been decided to permit 100 percent FDI under automatic route for SBRT.
Further, an SBRT entity will be permitted to set off its incremental sourcing of goods from India for global operations during initial five years, beginning April 1 of the year of the opening of first store against the mandatory sourcing requirement of 30 percent of purchases from India.
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For this purpose, incremental sourcing will mean the increase in terms of the value of such global sourcing from India for that single brand (in Indian Rupee) in a particular financial year over the preceding financial year, by the non-resident entities undertaking single brand retail trading entity, either directly or through their group companies.
After completion of this five year period, the SBRT entity shall be required to meet the 30 percent sourcing norms directly towards its India's operation, on an annual basis.
A non-resident entity or entities, whether the owner of the brand or otherwise, is permitted to undertake 'single brand' product retail trading in the country for the specific brand, either directly by the brand owner or through a legally tenable agreement executed between the Indian entity undertaking single brand retail trading and the brand owner.