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FDI in retail: Are there any takers?

Last updated on: November 28, 2011 17:12 IST

FDI in retail: Are there any takers?

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India Inc on Monday appeared to be divided on allowing foreign direct investment in multi-brand retail, an issue which has rocked Parliament and drawn stiff opposition from United Progressive Alliance ally Trinamool Congress.

While Federation of Indian Chambers of Commerce and Industry extended an all-out support to the government, Confederation of Indian Industry recommended 'a calibrated approach for introducing FDI in the retail sector in terms of the percentage and minimum capitalisation requirements'.

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Addressing a press conference, Ficci secretary general Rajiv Kumar said opening of the retail sector would create big employment opportunities in the country.          

Without naming, he said those industry associations which are opposing the foreign direct investment in multi-brand retail have a vested interest.

"This is just a fear that has been created for some vested interest. FDI in retail will be a game-changer like telecom. I see only positive impact on employment," he said.

CII, on the other hand, said while it 'strongly supports the introduction of FDI in multi-brand retail trading, it recommends a calibrated approach for introducing FDI in the retail sector in terms of the percentage and minimum capitalisation requirements'.

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FDI in retail: Are there any takers?

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Kumar said the associations which are raising concerns that global retail chains like Walmart and Tesco would wipe out mom-and-pop stores are following a 'politically motivated argument'.

Some traders' associations are arguing that about 40 million employed in this sector would loose their earnings because of opening of big foreign retail stores.

"In fact, foreign stores will generate employment and that will be higher quality employment. Small stores would also increase their employment to compete with the big retailers," he said.

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DMK ask govt to withdraw decision

Terming as 'dangerous' the Centre's move to allow foreign direct investment in retail trade, UPA ally DMK on Monday demanded the decision be withdrawn forthwith, said another report from Chennai.

Dravida Munnetra Kazhagam chief M Karunanidhi said, "The Centre's insistence that states should go by the decision cannot be justified.

"DMK had opposed FDI in retail trade even when the idea was originally mooted".

DMK, which has 18 members in the Lok Sabha, is the second UPA constituent to oppose the move, the first being the Mamata Banerjee-led Trinamool Congress, which also have the same number in the Lok Sabha.

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Image: M Karunanidhi.
Photographs: Babu/Reuters
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"It is dangerous to allow FDI in retail trade as it will affect lakhs of small traders as well as the poor and middle class consumers.

It will also be a cause for economic decline for our country.

The DMK has sounded a note of warning in this regard in the Parliament", he said in a statement.

Karunanidhi said, "India will suffer very much if FDI in retail trade is allowed with small traders and poor consumers losing their livelihood."

"Through FDI, India will have to face a tsunami-like situation which badly affect the economy.

"Therefore, great caution has to be exercised", he said.

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Taking a dig at his arch rival and Tamil Nadu Chief Minister J Jayalalithaa, who had alleged that the Centre had adopted an arrogant approach without consulting the state on the issue, Karunanidhi said the Centre's announcement could not be compared with her decision to 'steeply hike' milk price and bus fares.

The Centre should neither compel the states nor even suggest to them to implement the decision, he said, adding the Centre should withdraw the decision accepting the views of DMK and other political parties and also the unanimous demand of small traders.

This is for the second time in as many days the DMK had come out against the Centre, the first one being to oppose the Indian Coast Guard's proposal to create a no-fishing zone in Palk Straits to avoid attack on Indian Fishermen.

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FDI decision should be withdrawn: Trinamool

UPA ally Trinamool Congress on Monday questioned the purpose of the proposed all-party meeting by government on the issue of FDI in retail and demanded its immediate withdrawal.

"Now they (government) have called for an all-party meeting on FDI. But what is the point when you have already decided.

"We want the FDI decision to be immediately withdrawn," TMC parliamentary party leader Sudeep Bandopadhaya told reporters outside Parliament House.

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Image: West Bengal Chief Minister Mamata Banerjee addresses a rally.
Photographs: Reuters
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However, he hastened to add that the TMC has nothing to do with Opposition demand on the FDI issue.

"We have nothing to do with opposition move in Parliament or outside Parliament. We have given our views."

Claiming that it had played a major role in getting the prices of fuel reduced, the TMC leader said, "Opposition parties have also opposed fuel hike but what happened.

"It is the TMC which has protested the fuel hike effectively as all our members of Parliament had come to meet the Prime Minister on the issue and as a result petrol price was reduced within 15 days."

Asked what will be their stand in the all-party meeting, he said, "We will oppose the FDI decision at the meeting also. We are of the opinion that it should have been discussed before the decision."


Image: The Parliament.
Photographs: Reuters
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Naveen demands withdrawal of FDI

Terming the decision to allow FDI in retail as 'highly regressive' and 'ill advised', Odisha Chief Miniser Naveen Patnaik on Monday urged Prime Minister Manmohan Singh to withdraw it, said a report from Bhubaneswar.

"In our considered view, this policy is ill advised and highly regressive. I would, therefore, earnestly request you to reconsider the matter and withdraw this policy immediately," Patnaik said in a letter to the prime minister.         

"I am deeply distressed to hear about the Union Cabinet's approval for allowing 51 per cent foreign direct investment in the retail sector," he said, observing that the biggest challenge facing the country was persistent double digit inflation.

Claiming that the move would only favour large multi-national corporations which would have monopoly over trading in the country, Patnaik said the Centre should have instead strengthened marketing opportunities for farmers and small-scale manufacturers.

The Centre should have done this through appropriate supply side interventions including stepping up investment in rural infrastructure and research and development for augmenting farm productivity, he said.

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Image: Naveen Patnaik.

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Govt trying to 'derail' debates in Par on major issues: Left

Left parties, demanding rollback of the move to allow FDI in retail, on Monday accused the government of deliberately taking a decision to 'derail' debates in Parliament on major issues like price rise, corruption and Lokpal.

"There is no point in having a debate on FDI in retail when a decision has already been taken. So, the government should rescind the decision and then hold a discussion on it.

"If it does not, then it is clear that the government does not want Parliament to function when there are important issues like price rise, corruption and the Lokpal Bill to be debated," senior Communist Party of India-Marxist leader Sitaram Yechury told reporters

at a joint press conference with his counterparts from Communist Party of India, RSP and Forward Bloc.

Maintaining that an executive decision on a 'major policy matter' like FDI in the retail sector has never been taken in the past when Parliament was in session, he said, "They have not only bypassed Parliament, but it is a big provocation to make Parliament impotent."



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