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LATEST NEWS UPDATES | Poor response from states on FDI in multi-brand retail

Poor response from states on FDI in multi-brand retail

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published Published on Aug 9, 2012   modified Modified on Aug 9, 2012
-The Times of India

With the UPA government's efforts to build a consensus on allowing foreign retailers in the multi-brand retail sector going nowhere, Prime Minister Manmohan Singh on Wednesday urged the UPA allies to help evolve a consensus on the reforms measure.

Participating in the first meeting of the newly set-up UPA co-ordination committee, PM said that it was necessary to build support for the move to let in foreign retailers.

The appeal came on a day when government revealed that Centre's enthusiasm for allowing FDI in retail has not rubbed off on the state governments, the big ones belonging to Congress included. While the government wrote to all states in June seeking their support for implementing the decision to allow 51% FDI in the multi-brand retail sector, so far only two Congress-ruled states and two Union Territories have formally backed the move.

"Till date, written communications, indicating support for FDI in multi-brand retail trade, have been received from the governments of national capital territory of Delhi, Manipur, and from the Union Territory of Daman & Diu and Dadra and Nagar Haveli," Jyotiraditya Scindia, minister of state for commerce and industry, told the Rajya Sabha in a written reply on Wednesday.

The poor response from even Congress-ruled states comes as a setback for the government's efforts to open up the sector. It also adds muscle to the stiff opposition from BJP, Samajwadi Party, JD(U) and Communist parties to the move to allow foreign retailers such as Wal-Mart, Tesco and others in the lucrative multi-brand retail sector.

Samajwadi Party chief Mulayam Singh Yadav had teamed up with Left leaders and had shot off a letter to the prime minister urging him not to go ahead with the move to open up the sector. Bihar chief minister Nitish Kumar has also opposed the move. Kumar has said the government needs to be cautious "because at stake is the stability of vital pillars of our economy — retailing, agriculture and manufacturing".

The Samajwadi Party decision to support the UPA in the presidential elections had stirred hopes that some of the pending reforms could be pushed through once the polls were over.

The ruling coalition is keen to get long pending economic reforms off the ground to signal its resolve to boost growth and sentiment. Commerce, industry and textiles minister Anand Sharma has held talks with several chief ministers to garner support for opening up the multi-brand retail sector, which is seen as a test case for pushing economic reforms.

The government says that states would be given the option of allowing FDI in multi-brand retail. It was hoping that Congress-ruled states would declare overwhelming support for the move but the latest statement from the government shows that even these states are dragging their feet on the issue.

Sharma says allowing FDI in retail will usher in huge benefits and create jobs. It will help build the supply chain, cold storages and benefit the farm sector. The government also says the move will help in efforts to reduce wastage of fruits, vegetables and other products and tame inflation. But opposition groups, traders and some allies of the government say that allowing FDI in the sector will hurt small stores and kirana shops and lead to massive job losses.

The Times of India, 9 August, 2012, http://timesofindia.indiatimes.com/business/india-business/Poor-response-from-states-on-FDI-in-multi-brand-retail/articleshow/15412247.cms


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