NEW DELHI:In September 2012, when the then Manmohan Singh-led-UPA government, in order to shed the ‘policy paralysis’ tag, allowed 51 per cent FDI in multi-brand retail, the BJP vowed to roll it back if voted to power as it turned the issue into a major election plank. Now, as the NDA government inches towards completing one year in office it has retained its predecessor’s key reform measure.
The ‘ideological shift’ in the government stance became apparent when it came out with the latest edition of FDI document that would come into force from Tuesday. In the 191-page circular — Consolidated FDI Policy — released by the Department of Industrial Policy and Promotion under the Commerce Ministry, 51 per cent FDI in multi-brand retail has been retained.
The NDA’s decision to continue with the pro-market reform measure initiated by
the previous government appears to have been taken to maintain a reformist image, while any move to tinker with the policy can wait. Senior Cabinet ministers had time and again maintained that the BJP and government’s stance on the FDI remained the same and a rethink would be done at an appropriate time. However, its decision to retain the UPA’s key reformist move is only likely to expose it to barbs from Opposition parties, and criticism even from RSS-affiliated groups that were opposed to the move. The BJP’s main vote-bank, the small traders, were also opposed to the policy of opening up of the retail sector to foreign players fearing it would impact them. The BJP’s manifesto too had opposed FDI in multi-brand retail.
The FDI document released late on Tuesday mentions all existing FDI policy decisions as also changes made over the past one year. These include changes in the FDI cap in defence and insurance sectors, where limits have been hiked to 49 per cent from 26 per cent earlier. Interestingly, DIPP secretary Amitabh Kant had earlier in the day said, “In the last 8-9 months we have opened up every single aspect of the economy. We opened up defence sector, construction, insurance, medical devices... other than multi-brand retail.”
“Minimum amount to be brought in, as FDI, by the foreign investor, would be $100 million. At least 50% of total FDI brought in the first tranche of $100 million, shall be invested in ‘back-end infrastructure’ within three years,” the policy added.
The 51 percent FDI policy leaves it to the states to take their own decisions. “FDI in multi brand retail trading, in all products, will be permitted, subject to the following conditions that Fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meat products, may be unbranded,” the policy said.
“Minimum amount to be brought in, as FDI, by the foreign investor, would be US $ 100 million. At least 50% of total FDI brought in the first tranche of US $ 100 million, shall be invested in ‘back-end infrastructure’ within three years,” the policy added. These were the same conditions as announced by the UPA.