Govt launches campaign to sell FDI in multi-brand retail

Under attack from the opposition and United Progressive Alliance (UPA) ally Trinamool Congress on allowing global retail chains in the Indian market, the government today launched a campaign to sell advantages of Foreign Direct Investment (FDI) in multi-brand retail.

In a full page advertisement in newspapers, the Commerce and Industry Ministry said FDI in multi-brand retail will help farmers, create more jobs and benefit consumers.

It said there are several myths on the issue. These include that kirana and retail stores will lose and retail sector will be controlled by foreign stores.

On the other hand, the reality is that domestic retailers will benefit from sourcing their requirements from wholesale cash and carry store at a discount, it said.

The government said in countries like China, Thailand, Indonesia, Brazil and Singapore, where there are no caps on FDI, small retail stores have flourished.

The government advertisement said that there is another myth that FDI in multi-brand may result in job losses. "Contrary to this mistaken belief, FDI in multi-brand retail will generate 10 million new jobs."

It said that it is also a fiction that farmers would be exploited and lose their fields and crops to foreign investors. On the other hand, "farmers will receive better remuneration for their produce".

In a bold decision, the Cabinet on November 24 decided to allow 51% FDI in multi-brand retail and removed the 51% FDI cap on single brand retail. Almost the entire opposition and Trinamool Congress are up in arms against the decision and have paralysed Parliament in protest.

Some chief ministers of the states, ruled by the central opposition parties, have also expressed anguish on opening up of the sector for foreign chains like Walmart and Carrefour.

Uttar Pradesh Chief Minister Mayawati has made it clear that her state would not grant trade licence to the global chains.

The final authority of issuing trade licences rests with the state governments.

Commerce and Industry Minister Anand Sharma has expressed hope that states would welcome the decision and open their doors for the foreign chains. He said he was sympathetic to farmers and consumers in those states where the mega stores will not be allowed.