Centre's flip-flop leaves retail FDI policy in limbo

Centre's flip-flop leaves retail FDI policy in limbo

Govt bats for it; ruling party against it

Centre's flip-flop leaves retail FDI policy in limbo

 A flip-flop by the government on Thursday left the status of foreign direct investment (FDI) in multi-brand retail (MBR) in a limbo.

Two days after the ministry of commerce put out a policy document letting foreign retailers own 51 per cent stake in multi-brand retail in India, Finance Minister Arun Jaitley said his party’s stance remained the same in that it was not in favour of MBR. Minutes later Commerce Minister Nirmala Sitharaman echoed the same tune even though on the official document, the MBR remained open up to 51 per cent FDI.

“Our political stand on FDI in retail is clear; The Department of Industrial Policy and Promotion (DIPP) has only mentioned the existing position,” Jaitley told reporters here. To a question on what the foreign investors were supposed to do on MBR now, Jaitley said, “investors know the actual position, they know the debate in India and how it phased out”.

On whether Walmart can come and invest in India, Jaitley said he had no answer and that the question be put to the DIPP. On her part, Sitharaman said, “I have not taken a new policy, I have not taken a new stand other than what my party had won its election on.”

The DIPP under the Commerce Ministry had, on May 12, released a consolidated FDI policy document which retained the previous UPA regime’s decision allowing foreign investors to own up to 51 per cent in multi-brand stores in India. The change in the government’s stance subsequently came into fierce criticism by traders, who constitute the largest vote bank for the BJP.  They charged it with going back on its election promise.

The BJP had mounted a fierce opposition against the 2012 UPA decision to throw MBR open to foreign investors. It had also moved a motion against retail FDI in the Lok Sabha. Later, in the run up to the Lok Sabha elections, the party had said it would reverse UPA’s decision if voted back to power.

The latest consolidation of the annual FDI document of May 12 incorporated all policy changes effected over the past one year in sectors like defence, insurance and railways but retained the MBR policy decision by the previous government.

“Let’s just be absolutely clear on that. It is a compendium...if there has to be a one-point reference somewhere to know what is the FDI in any of these segments or ministries or departments, you need a document which speaks about it all in one place. And that is exactly what we have done from the ministry to compile it,” Sitharaman said on Thursday.

Flip-flop in execution

DIPP released a consolidated FDI policy document which retained UPA’s stance
Both Jaitley and Sitharaman now say the BJP is still opposed to retail FDI
Sitharaman says document was just a one-point reference about FDI in all segments
Traders have charged the BJP with going back on its earlier stance