AAP's decision on FDI in retail irresponsible: Minister

Terming the Delhi government's decision to disallow foreign direct investment in multi-brand retailing as ‘abrupt, irresponsible and ill-considered,’ Commerce and Industry Minister Anand Sharma on Tuesday said India is not a banana republic where policy decisions can be reversed.

The ministry, he said, will examine the communication of the newly installed Aam Aadmi Party-led Delhi government on reversing the earlier decision of the state to allow foreign direct investment policy in multi-brand retail trading.

"There is a gazette notification after the (Congress-led) Delhi government approved the policy. It is notified. We are not a banana republic. India has never seen such policy reversals," he said.

The minister said the decision of the new government, which is in a minority, is "irresponsible, ill-considered, abrupt and arbitrary.

“It is a regressive decision. Responsible governments can ill-afford to take arbitrary decisions and knee-jerk reactions."

In a major policy reversal, the AAP government wrote to the Centre to withdraw the approval given by the previous Sheila Dikshit government for FDI in multi-brand retailing in Delhi, saying the entry of global chains such as Walmart and Tesco in India would result in large-scale job losses.

Sharma, however, said the Centre had formulated the policy after wide consultations with all stakeholders, including farmer unions, MSMEs and state governments.

"The question is whether the farmers, consumers and small entrepreneurs are part of the lexicon of Aam Aadmi or are excluded. The view that it may lead to job losses has neither any merit nor any logic," he added.

Sharma said the communication received by the Ministry of Commerce and Industry does not give any reasons for the withdrawal of the policy.

Sharma said the policy allowing FDI in multi-brand retailing was aimed at reducing post-harvest losses and create infrastructure such as cold chains, "which will lead to job creation and remunerative prices for the farmers."

"Now the question is. . .Can a minority government with outside support reverse such decisions?. . .We will have it examined," he said.

The central government permitted 51 per cent FDI in multi-brand retailing in September 2012 and left its implementation to the states.

As many as 12 states, mostly Congress-led, including Delhi and Rajasthan, agreed to allow global retailers to open supermarket chains.

The other states include Maharashtra, Karnataka and Andhra Pradesh.

Rajasthan, too, saw a change of government with the Bharatiya Janata Party coming to power after the November-December state assembly elections.

It is still not clear what stand the BJP government in Rajasthan will take on the FDI policy.

FDI in multi-brand retail had not evoked the expected response from global retailers.

So far, only one proposal from UK-based Tesco has been approved by the central government.

Image: Anand Sharma