No reversal on FDI in retail decision, PM
India's Prime Minister Manmohan Singh has refused to budge to pressure from the opposition as well as political allies over the issue of allowing more Foreign direct Investment (FDI) in the retail sector in the country.
The move will allow global giants like Wal-Mart, Tesco and Carrefour to enter the Indian market.
Those who favor the deal argue that it will address the issue of supply bottle necks, develop supply chain infrastructure, reduce wastage of food and improve efficiency, besides generating employment. They also say that it will benefit farmers, who will be able to negotiate better deals with large firms and ultimately, customers, who will get commodities at a cheaper price.
Opponents argue that the allowing big international players will affect small retailers, which dot the country's streets. They cite the examples of Thailand and Malaysia, which allowing FDI in retail has resulted in problems for small retailers.
The union cabinet's decision to allow FDI in single brand retail sector has been opposed severely by several sections political as well as social setup in the country. The central government has also said that individual states will be allowed to veto foreign retailers. The chief ministers of Uttar Pradesh, West Bengal, Tamil Nadu and Bihar have vowed not to allow FDI in their respective states.
The ruling congress party is concerned as the opposition to the FDI not only comes from its main rival BJP but also others like AIADMK chief J Jayalalithaa, Trinamool Congress chief Mamata Banerjee and BSP chief Mayawati. The tree women Chief Ministers will have toe power to veto the entry of foreign firms into their states.
The department of industrial policy and promotion of the India government had put forward a proposal to allow 51% FDI in multi-brand retail and 100% in single-brand retail in the country. Most union ministries are believed to have given their consent to the proposal and a decision is expected next week on the matter. The move will allow foreign players to bring expertise in logistics and investment, which could help address supply bottlenecks in the country.