Antony opposes FDI in Retail

Sheela Bhatt reports on the divisions in the Cabinet and Congress party over the decision to allow FDI in retail.

Defence Minister A K Antony expressed his displeasure to Prime Minister Manmohan Singh, in presence of their Cabinet colleagues, for permiting 51% Foreign Direct Investment in multi-brand retail.

This means that not only there is no consensus on the controversial issue within the ruling United Progressive Alliance and outside the UPA, but even the Congress party is divided over it.

Before the Cabinet approved the decision on Thursday, November 24, Dr Singh had to face a rebellion on the issue.

The Cabinet approval will boost major global retail businesses like Tesco and Wal-Mart who have been permitted to own up to 51% of retail joint ventures.

Single brand retailers can own 100% of their Indian operations; until Thursday's decision, only 51% was allowed in this sector.

The issue is likely to heat up further in the days to come with the Communists and the Bharatiya Janata Party opposing the decision.

CPI MP Gurudas Dasgupta warned, "It will lead to the displacement of crores (hundreds of thousands) of small retailers in the market. FDI induction will also increase the price rise in retail goods."

Before Antony spoke on Thursday, Congress ministers including M Veerappa Moily and Mukul Wasnik had opposed the FDI in retail proposal in the run-up to the Cabinet meeting.

A senior Congress leader is also opposed to Dr Singh's idea to push the reforms in the critical sector that touches every citizen's life. Congress leaders are worried that it will be seen as a pro-American move because United States President Barack Obama had openly lobbied for it during his visit to India last November.

On Wednesday, West Bengal Chief Minister Mamata Banerjee told the media that since her Trinamool Congress party is represented by just one minister in the UPA Cabinet, it 'cannot raise its voice against the majority.' In an interview to CNN-IBN, Banerjee opposed the government's decision to allow FDI in multi-brand retail.

She told CNN-IBN, 'We have to give more support to our farmers. We are not able to give our jute farmers the price. First, you have to ensure minimum support price for our farmers and then go for FDI. Though we (the West Bengal government) don't have money I am giving subsidy to jute farmers. First, you give protection to your own farmers that they don't commit suicide and then go for big things. I don't have a problem as long as my farmers are safe.'

Deputy Chairman of the Planning Commission Montek Singh Ahluwalia had told the media last Saturday that a consensus was being built on the FDI issue, but it seems such a consensus could well be a mirage.

The list of opponents of the Cabinet approval on FDI in retail is growing. It includes a section of the Congress party led by Antony; the BJP; the Communists; and the Trinamool Congress. As more details emerge, the farmers lobby, kirana stores and the Left trade unions are likely to join in the protests.