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Trouble enroute
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New Delhi, July 23: The government will go ahead with its plan to notify foreign direct investment in multi-brand retail even though ally Samajwadi Party (SP) has joined hands with the Left parties to oppose the move.
“There is no change in plans to notify the cabinet decision taken last year (on FDI in multi-brand retail) due to the opposition,” a senior commerce ministry official said.
The firm stand of going ahead with the reform measure is seen as an attempt by the government to send a strong signal to foreign investors that policy reforms are on track.
In November last year, the Union cabinet had allowed 51 per cent FDI in multi-brand retail. However, the government chose not to implement the decision following opposition from the Trinamul Congress and others.
In a recent letter to Prime Minister Manmohan Singh, SP chief Mulayam Singh Yadav and several Left leaders had said parties across the spectrum were opposed to opening up FDI in multi-brand retail, which employs about 40 million people.
The Left leaders who signed the letter were CPM general secretary Prakash Karat, CPI general secretary S. Sudhakar Reddy, RSP’s Abani Roy and Forward Bloc’s Debabrata Biswas. JD(S)’s Danish Ali was also a signatory.
Commerce minister Anand Sharma declined to comment on the letter and said, “I have not seen any letter and I will not comment.”
Officials said Sharma would reach out to Uttar Pradesh chief minister Akhilesh Yadav to win his support.
Though officials were certain about the notification on FDI in multi-brand retail, they could not spell out any timeline.
“FDI will be made operational by a notification. The states have a bigger role to play in the implementation as they have the final authority to give licences,” officials said.
Sonal Varma, economist at Nomura Holdings, said: “The government will not have a smooth sailing on FDI in retail… a lot of political work has to be done in terms of building consensus even within ruling coalition partners.”
Small traders and some political parties feel that allowing global chains in retail trade will harm local grocers.
Officials said the Centre was only a facilitator in opening up the sector as states had a larger role to play in the roll-out of stores.
The cabinet had proposed that multi-brand retailers be allowed to open shop in cities with a population of one million and above.
According to the census carried out last year, only 53 cities out of 8,000 in the country meet this criterion.
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