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189FDI in multi-brand retail: Commerce ministry panel to study possibility

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  • Navin Arya
    Aug 19, 2010
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      FDI in multi-brand retail: Commerce ministry panel to study possibility

      20 Aug, 2010, 08.01AM IST, Devesh Kumar,ET Bureau


      NEW DELHI : The commerce and industry ministry has set up a five-member committee to study the possibility of allowing FDI in multi-brand retailing.

      The committee, which has been set up by the department of industrial policy and promotion, will be headed by an officer of the rank of additional secretary from the department of consumer affairs , and will include representatives from the agriculture ministry, department of economic affairs and the ministry of micro, small and medium enterprise , besides DIPP.

      “The panel has been asked to meet stakeholders so as to elicit their views on the proposal to allow FDI in multi-brand retailing,” said a senior DIPP official.

      The subject is a political hot potato, with the principal Opposition party, BJP, making it clear that it will resist any move to permit FDI in multi-brand retail, arguing that such a step would sound the death knell for the small and medium enterprises and local kirana stores, which form its core constituency.

      The decision to set up the panel is being seen as a follow-up to the release of a discussion paper on the subject by the department in May. The 21-page document had come out with the pros and cons of the move to allow FDI in multibrand retailing, besides undertaking case-studies of Brazil, Argentina, Singapore , Indonesia, China and Thailand, which have not placed limits on equity participation , and Malaysia, which has put a cap.

      That the government was exploring the possibility of facilitating FDI in multi-brand retailing was clear from commerce and industry minister Anand Sharma’s statement made on April 27, when he affirmed that the Centre was consulting various stakeholders on the issue.

      “FDI in multi-brand retail is part of the discussion paper being prepared by our ministry. We are also studying the scope of FDI in sectors like agriculture, defence and retail,” he had said.

      BJP, however, has already declared its intention of opposing the move tooth and nail. “BJP is against FDI in multibrand retailing. There are nearly 10 crore enterprises (SME and trades) in India and it is believed that they are growing by 15% annually. MNCs, with their predatory pricing policies and large cash reserves, will crush our retailers,” party spokesperson Nirmala Sitharaman had said in a statement issued on July 8.

      Responding to the DIPP discussion paper, she remarked: “It is well known that the UPA government is in a hurry to open the retail sector for foreign investment. Slowly but surely, steps are being taken in this direction. Initially, the cash and carry business was opened with the intention of allowing FDI in the wholesale trading.

      There were instances where this business actually became a retail trade in the garb of cash and carry. Thereafter, single brand retail trading was allowed through outlets. The next step in the direction was to allow Indian companies to set up retail stores ostensibly without FDI, but actually permitting a device by which the Indian companies would be the front office with a foreign investor being the back office under the garb of cash & carry,” Ms Sitharaman said.

      Sincerely yours,
      Navin Arya
      Executive Assistant
      J-290, Saket
      New Delhi - 110017
      Mobile: 98-103-61639