After Tata Motors, German wholesale retailer Metro Cash & Carry could also exit West Bengal over political differences, this time within the ruling Left Front.
Left Front constituent Forward Bloc, which runs West Bengal's agriculture marketing board, today rejected the proposal to renew the Agricultural Produce Marketing Committee licence for Metro Cash & Carry.
However, to prevent Metro's exit from the state, Communist Party of India-Marxist Chief Minister Buddhadeb Bhattacharjee has instructed South 24 Parganas' district magistrate to issue the APMC licence. Metro's outlet in Kolkata falls under the jurisdiction of South 24 Parganas.
Bhattacharjee's decision has upset the Forward Bloc, which met on Friday to protest. According to Ashok Ghosh, the general secretary of All India Forward Bloc (AIFB), "Bhattacharjee cannot take these decisions without discussing it with us. From Monday, our ministers will not go to Writers' Buildings till the chief minister's letter is withdrawn."
Earlier in the day, Bhattacharjee and Asim Dasgupta, finance minister, had appealed to the Forward Bloc to renew the licence. But Ghosh rejected their requests.
The CPI-M and Forward Bloc will meet on September 28 to decide the issue.
Metro had announced plans to open four cash and carry centres in Kolkata at an investment of about Rs 564 crore, employing 1,400 directly and 600 indirectly.
The state had issued the APMC licence to Metro Cash & Carry in 2006, valid till March 2008, because the company had explained that it is a business-to-business wholesaler.
However, according to Ghosh, many small and medium traders already supply to hotels, restaurants and hospitals, and Metro's entry would hurt their businesses. Therefore, he said, the APMC licence could not be renewed.
Martin Dlouhy, managing director, Metro Cash & Carry, India, had earlier said the company was willing to wait till September 28, as Bhattacharjee requested, and would not open its first outlet on Kolkata's Eastern Metropolitan Bypass, till it received the licence.
However, if the company's APMC licence was not renewed, the company would keep all its options open, including moving out of the state.
Gunter Wehrmann, consul general of Germany in Kolkata, added that there will be no scope for more German investment in the state if Metro Cash & Carry is not given the APMC licence.
"German investors are in the habit of following their counterparts, and so they are following Metro's situation closely. As it is, many German investors are wary of investing in the state after the Singur issue. Now if Metro Cash & Carry is also forced to leave, it will sound the death-knell for the state as far as any German investments in West Bengal are concerned," Wehrmann said.
So far in Kolkata, Metro Cash & Carry has invested Rs 140 crore and has employed 350 people in one centre alone. Metro said it is ready with infrastructure, spread over 100,000 sq ft, on the Eastern Metropolitan Bypass.
Metro's APMC licence was withdrawn by the APMC authorities despite the knowledge that the company had had to stop construction owing to a stay order for eight months based on a legal dispute between former land owners and the government, which did not directly involve Metro.