The Congress on Thursday accused the Modi government of helping the interests of foreign companies by allowing relaxation in sourcing rules of 30 per cent local products and permitting online sale in single brand retail.
Congress chief spokesperson Randeep Surjewala said the announcement is not in consonance with 'Start-Up India' and 'Make in India' initiative and discourages local entrepreneurs and businesses.
"The BJP government has done grave damage to the interests of Indian traders and shopkeepers by giving huge relaxation in FDI rules to foreign companies. By giving relaxation in FDI rules to foreign companies in single brand retail, the BJP government has caused grave damage to Indian shopkeepers and traders," he said in a statement.
"The Congress condemns this decision of the Modi government of damaging the interests of Indian shopkeepers and small and medium enterprises," he said.
The Congress leader alleged that the Modi government is "engaged in helping the interests of foreign companies" by fulfilling their wishes and has changed the rules of 30 per cent local sourcing in their favour.
The government on Wednesday relaxed conditions for single-brand retailers having foreign direct investment (FDI) for complying with the mandatory 30 per cent local sourcing regulations by allowing them to adjust all of their purchases to meet this norm.
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He said foreign companies can now start selling online in 'single brand retail', two years before opening their ground outlets in the Indian markets.
This, he said, is a double whammy on the small and medium enterprises, rural industries and artisans.
"This decision is against the manufacturing policy implemented in 2011 in the country by the UPA and 'Make in India' promoted by the Modi government," he said.
Surjewala said these relaxation in rules would hurt the local businesses, as it will hurt trade and employment of shopkeepers or traders and workers of SMEs/MSMEs.
"This wrong decision will hurt the business and income of three crore Indian shopkeepers on one hand and the employment of 15 crore workers will also be in peril," he said.
Surjewala said there will be no benefit to India from this decision and there is a danger of reduced foreign investment in the country.
"The Modi government has fulfilled the cherished desire of foreign companies as a result of which they are free to operationalise their online stores of single brand retail two years before opening their actual outlets in the Indian market.
"With the opening of actual outlets, foreign money comes to Indian markets and foreign companies would create jobs through land, building construction and rent generation," the Congress leader said.
Through this process, he said, foreign companies will be able to supply their goods directly to the vast Indian market of 130 crore by simply creating a website.
Till now, online sales were allowed only after opening of the actual outlets, whereas now the actual store is supposed to be opened only two years after the start of online sales, he said.
Surjewala said apart from this, the Modi government has changed the rule of 30 per cent local sourcing for foreign companies in single brand retail in the favour of these firms.
"Now, the purchase for export is also included in local sourcing. This means, it will no longer be necessary that goods these companies are selling in India be purchased locally. Now onwards, if foreign companies buy and export only 30 per cent of India's goods, then they can sell their entire lot of imported goods in India," he said.
"Surprisingly, through this decision, the Modi government has made a provision for review of local sourcing every five year instead of every year," he said.
The single brand retailer, the Congress leader alleged, will use the goods it will buy from India for global operations to fulfil its 30 per cent local sourcing condition from India during the first five years, starting from April, that means no questions will be asked from them for seven years because for the first two years till the opening of the stores and five years thereafter, there will be no review of their functioning.
Surjewala said earlier the rule of 30 per cent local sourcing protected the interests of Indian small and medium industries, rural industries and artisans because foreign companies used to make them partner in their trade and production so that they could supply their goods in the Indian market.
India is the second largest country in the world with respect to the number of small and medium enterprises, which act as a major engine for India's economy and employment and more than 15 crore workers are engaged in three crore medium industries in the country.
Surjewala said foreign multi-national companies will be the biggest beneficiary of change in foreign direct investment policy of the government and their entry and dominance in India's retail business will become easier. Foreign investment should be encouraged only in those areas which facilitate more capital investment, employment generation and latest technology in the country, he said.
But, this new decision will not benefit all these three areas rather than manufacturing and employment in small and medium enterprises (SMEs) in the country will shrink, and it will lead to increase in unemployment in the country, he noted.