In a new twist to the raging debate on allowing FDI in multi-brand retail, the Finance Minister, Mr Pranab Mukherjee, on Friday said that States' would have to be involved for building a “larger consensus” on this “complex” issue.

Making it clear that the Centre has not taken any decision on allowing Foreign Direct Investment (FDI) in multi-brand retail, Mr Mukherjee told Lok Sabha that States' view on the matter would have to be ascertained before a decision can be arrived. The Finance Minister also asserted that no “off the cuff” decision will be taken by the Centre on this matter.

He was replying to a calling attention moved by Mr Gurudas Dasgupta (CPI) and Mr Nishikant Dubey (BJP) in the lower house on the issue of liberalising FDI in retail sector.

The existing Government policy allows for 51 per cent FDI in only single brand retail trade, subject to specified conditions. No FDI is permitted in multi-brand retail.

Mr Mukherjee's remarks on the need for roping in State Governments for a “larger consensus” are significant. This is because the entire effort of generating an informed discussion and seeking stakeholder comments was so far confined to the Ministries and departments of Central Government.

With the Centre looking to ascertain the views of the States, it is possible that a different perspective may emerge on this complex issue, say industry observers. To protect the “crores of small traders”, a political party has even spelt out in its manifesto for the upcoming Assembly polls that it would oppose foreign investment in retail trade if it were to be voted to power.

On their part, several trade bodies and investors have already made representations and suggestions to the Central Government for allowing FDI in multi-brand retail.

In July last year, the Department of Industrial Policy and Promotion (DIPP) released a discussion paper titled ‘Foreign Direct Investment in multi-brand retail trading' and invited views of local retailers, foreign companies and industry associations. Foreign companies such as Wal-Mart and Carrefour have already got a foothold in the Indian market by opening wholesale stores.

Mr Mukherjee noted that an inter-ministerial committee was constituted to examine the comments received on the discussion paper. The Committee was headed by the Senior Economic Advisor, Department of Consumer Affairs.

The Finance Minister pointed out that the committee had not made any recommendations relating to FDI in multi-brand retail trading, although the report was submitted to the Government. Out of the 109 respondents representing various interests, as many as 73 had expressed their opposition before the official committee, he noted.

krsrivats@thehindu.co.in

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