Policies can't be frozen: Centre

Talking to reporters after meeting Malaysian Prime Minister Mohd Najib Tun Razak here, Sharma said “This is a step forward. The policy formulation is a dynamic process and cannot be frozen and it cannot go backward.” He said if India aspires to be a global leader, it has to “think big”. Allaying concerns among India’s unorganised retail traders, Sharma said: “I definitely won’t agree that there will be loss of jobs due to FDI.”
As a formal move towards permitting entry of global retailers like Wal-Mart, Carrfour, Tesco and Metro, Sharma’s ministry released a discussion paper inviting comments from stakeholders by July 31.

India, at present allows 51 per cent FDI in single brand retail and 100 per cent in the cash-and-carry (wholesale) formats.

The concept suggests that the foreign players may be asked to invest heavily in the back-end infrastructure like cold storage chains, before they are allowed the front end retailing. “When infrastructure is created, jobs will be created and jobs will not be taken away,” Sharma asserted.

Cautious stance
Meanwhile, Department of Industrial Policy & Promotion Secretary R P Singh said unlike the defence sector, the Centre has adopted cautious approach on opening up multi-brand retail to foreign investment,

“We have left it (fixing a cap on FDI) open. Based on the response which we get from the stakeholders, we will take a view,” Singh told PTI. The secretary of DIPP — which is responsible for the policy on the country’s foreign direct investment (FDI) — indicated that the government has taken a cautious approach in the case of multi-brand retail.
“We have not taken a clear stand like we did in the case of defence. We did not give a stipulation as to what should be percentage (for FDI)” he said.

Single brand investment is confined to sportswear, luxury goods, apparel, jewellery and handbags.

Asked how soon multi-brand retail, a politically sensitive sector employing about 33 million people in the neighbourhood mom and pop (kirana) stores, would be thrown open for overseas investment, Singh said it was difficult to fix a timeline.

“We cannot say... depends upon the kind of response we get, kind of concerns people express,” he said, adding, “We have to find ways of addressing (concerns) and we are trying to build a consensus to the extent possible.” He said concerns over impact on small traders by the entry of big retailers have to be taken on board. “You have to see how to integrate the retail sector with this value chain, that is important,” Singh said, adding it also has to be seen how unorganised retail should cope with the competition.