States not willing to show hand on FDI in multi-brand retail

Source: The Hindu Business Line, Jul 10, 2012

New Delhi: States may be for majority foreign direct investment in multi-brand retail but are not willing to commit in writing. The Department of Industrial Policy and Promotion (DIPP), Business Line learns, is yet to get any response from the States to its letter seeking their views on this move.

India Inc has been lobbying hard for FDI in multi-brand retail.

On November 24, the Cabinet decided to allow 51 per cent FDI in multi-brand retail. However, the political uproar that followed forced the Centre to put the decision on hold.

Since then, the Centre has been trying to build a consensus on the issue. According to a highly-placed government source, the Secretary of DIPP wrote to the Chief Secretaries of all the States almost a month ago. But till date, no State has responded — even those ruled by the Congress or its allies in the UPA. “The political set-up has to take a call. The Chief Secretary will seek views from the political leadership in the States and frame an appropriate response and send it back to the Centre. The Chief Secretaries cannot be asked to send the response by a particular date,” the source added.

As for the Congress-ruled States, the source clarified that since some of those Chief Ministers had aired views in public about the issue, the Chief Secretaries of those States might not have thought it proper to send the response.

At present over a dozen States have Chief Ministers belonging to the Congress or its allies in the UPA.

It may be noted that Kerala’s Chief Minister, Mr Oommen Chandy, recently countered the Commerce and Industry Minister, Mr Anand Sharma’s claim of support of all the Congress-ruled States. Mr Chandy said his State did not favour FDI in retail.

Opposition from the BJP ruled States and that of the Trinamool Congress is well known. The source said that though Gujarat had shown initial support, it has now adopted the BJP line.

Another government official said that any policy on FDI is the prerogative of the Centre. So, this seems unusual that the Centre is awaiting States’ views before implementing any policy decision on FDI.

“Do remember, it is the local authorities or departments of the State Government that give the various permissions to start a venture. So you have to bring States on board before implementing such a decision,” he added.

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