FDI in retail: Sharma writes to three CMs

The government is trying to build consensus on the politically-sensitive issue after putting on hold the decision to open up the multi-brand sector due to opposition from several state governments and UPA ally TMC. In the letter, Sharma asked the three non-UPA chief ministers -- Naveen Patnaik of Odisha, Prakash Singh Badal of Punjab and Akhilesh Yadav of Uttar Pradesh -- to recognise the intrinsic merit of this policy and support FDI in retail.

The government has renewed its efforts to forge a consensus on opening the doors to global retailers in the sector, estimated to be a about USD 550 billion market. It will also unfold immense employment opportunities for rural youth and make them stakeholders in the entire agri business chain from farm to fork, he said. On concerns about the impact of big shops on livelihood concerns of millions of small retailers, Sharma said that several studies have revealed that local retailers have found innovative ways to co-exist along with organised retail.

Meanwhile, in an official statement he said exuded confidence that a "political consensus" will be arrived on the issue in the next few weeks. Citing a report, Sharma said even in developing economies like China, Brazil, Argentina, Singapore and Thailand, where FDI is permitted up to 100 per cent, local retailers have found innovative ways to co-exist along with organised retail.

"We were also mindful of the imperative of ensuring food security for the poorest of the poor and have therefore retained the first right of procurement of foodgrains to rest with government for the public distribution system," he said. On the concerns that the multinational companies will resort to predatory pricing techniques to drive away small retail, he said "the Competition Commission has been established by law to ensure that such practices receive great scrutiny".

He added that "the right of those States which find merit in this policy must be respected, while acknowledging the prerogative of those States who have reservation". The FIPB (Foreign Investment and Promotion Board) approvals can only be there if the state has endorsed a proposal. According to the Trade License Act, the license has to be given by the state government. Under the Shop and Establishment Act, the state government accepts to do it.