Disappointed by the government's decision to put foreign direct investment (FDI) in multi-brand retail on hold, India Inc on Wednesday described the move as "highly regressive".
"It is a highly regressive move. For the growth of this vital sector of the economy, which is likely to result in strong linkages with the farm sector and for the economy as a whole, it is imperative that reforms like these should take place," FICCI President Harsh Mariwala said.
He was reacting to the announcement made by Finance Minister Pranab Mukherjee in Parliament that the government has decided to hold back its decision to allow 51 per cent FDI in multi-brand retail.
The decision to hold back FDI in multi-brand retail will have a strong impact on the domestic and foreign investor sentiment, another chamber, the Confederation of Indian Industry (CII), said in a release.
"We firmly hope that this would not be a rollback and a quick consensus is reached," CII Director General Chandrajit Banerjee said.
Describing the volte face as a case of "missed opportunity", Assocham Secretary General D S Rawat said, "It will send a very negative message to foreign investors."
Rawat said FDI in multi-brand retail could have created over 10 million jobs in three years, curbed wastage of farm products and benefited farmers through better prices for their produce.
Ficci urged the government to move ahead with this progressive reform and proposed solutions like considering a maximum of 49 per cent FDI in multi-brand retail and increasing the percentage of sourcing from the small scale sector, which was proposed to be fixed at a minimum 30 per cent.
The government was forced to put its decision to allow FDI in multi-brand retail on hold in view of stiff opposition from UPA ally Trinamool Congress and other political parties.