Unclear FDI policy irks local traders, stops foreign investment

Unclear FDI policy irks local traders, stops foreign investment

By NAVTAN KUMAR | NEW DELHI | 7 November, 2015
Although the BJP’s opposition to foreign direct investment (FDI) in multi brand retail is the official stance of the party, the present NDA government has not repealed the UPA decision allowing foreign retailers to open stores with 51% ownership, in the current consolidated FDI policy released in May this year. The new policy mentions Manmohan Singh government’s policy decisions plus changes made over the past year. These include changes in the FDI cap in defence and insurance sector, where limits have been hiked to 49% from 26%. Due to such ambiguity in the government’s position regarding FDI, international investment has not become a reality. 
After the BJP-led government came to power last year, there was speculation that the notification issued during the UPA-II regime would be scrapped. However, no effort has been made by the NDA government to withdraw the said notification. 
The government is also facing flak from the local traders who want the notification permitting FDI in multi brand retail be withdrawn. The BJP, in its election manifesto, had said: “Barring the multi-brand retail sector, FDI will be allowed in sectors wherever needed for job and asset creation, infrastructure and acquisition of niche technology and specialised expertise. The BJP is committed to protecting the interest of small and medium retailers, SMEs and those employed by them.”
The local traders’ community wants the Centre to withdraw FDI in retail immediately. Praveen Khandelwal, convenor of the Confederation of All India Traders (CAIT), which had a launched nation-wide agitation against the policy, said: “The continuity of UPA’s decision, which was strongly opposed by the opposition in 2012, should come to an end. The notification is still part of the current FDI policy under the present NDA government. Since the BJP leaders have maintained that the party is opposed to the policy, we do not see any logic behind the notification anymore,” said Khandelwal.
Most of the states, including Delhi, have not been eager to implement FDI in multi-brand retail. At the same time, no company has shown any interest or willingness to invest in this sector despite the fact that it is technically “open”. 
Commerce and Industry Minister Nirmala Sitharaman could not be contacted for comments. However, BJP spokesperson G.V.L. Narsimha Rao said that FDI in multi brand retail is ineffective and no proposal in its favour will be cleared while the BJP is in power.
 

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