UP's stand on retail a setback to its industries

Reliance Retail has been left high and dry as the Uttar Pradesh government sticks to its decision to close down the Reliance Fresh stores in the state even though the retail industry and farmers have urged the state government to reconsider its decision.

The UP government, in an expected decision, had ordered to close down the Reliance Fresh stores on August 23, a day after ten stores were opened in the state capital, citing law and order problems in the wake of trader's protest. The move is being seen as a major blow to the Reliance retail sector in the state.

Lucknow was the only centre where the Reliance Fresh stores were opened on August 22, only to be shut down on the government's order next day.

Chandrabhanu, the district magistrate of Lucknow, said the stores have been closed for 60 days by him, using his powers under section 144 of IPC. He, however, had no clue about the reopening of the stores as, he said, the company had not approached him.

The Chambers of Industries, farmers' community and the consumers in general are miffed at the state government's decision. They have asked the state government to reconsider its decision immediately in the larger interest of industries and farmers.

UP chapters of Confederation of Indian Industry (CII) and PHD Chambers of Commerce and Industry( PHDCCI) reacted sharply to the state government's decision, terming it as a retroactive step towards the development of the state.

The government's decision came at a time when the Reliance retail was pumping huge amount of money in the state and also creating jobs in the retail sector. Moreover, the decision will act as a deterrent to the possible entry of other retail chains like Subhiksha, Wall Mart and Metro in the state.

In a related government action, the state government also withdrew its much-hyped new agriculture policy that was hailed as 'pro-retail' sector policy and was announced with much fan fare by Chief Minister Mayawati on August 3 .

"This is not only a deterrent to the retail sector but the entire industrial sector in UP and the potential investors would think twice to come to the state," said Deepak Mallik, the chairman of CII. Similar view was expressed by Anil Shukla of PHDCCI, who said the move had shaken the investors' confidence greatly.

After successful foray of 'Big Bazaar' and 'Spencers' in UP, the Reliance retail was planning a major investment in the state with Reliance Fresh and Reliance Hyper stores.

With ten stores in Lucknow, it planned to open stores in Meerut, Allahabad, Bareilly, Varanasi, Kanpur and Agra in coming months. The plan received a setback following this decision.

Meanwhile, the state government has constituted a high level committee headed by Cabinet Secretary Shashank Shekhar Singh to study the matter and submit its report in a month's time. No report in this regard is available from any official of the government.

According to industry sources,Mukesh Ambani-led Reliance group was expected to invest Rs 5000-10,000 crore in the retail sector in UP during the next five years and the decision of the state government is likely to have an adverse effect on such plans.