BJP warns of FDI policy roll-back if voted to power

The main Opposition party, Bhartiya Janata Party (BJP)

has issued a warning stating that it may scrap the decision to allow foreign direct investment in multi-brand retail, if it’s voted to power. This has prompted the government to rush and reassure potential investors. The BJP has been opposing FDI in multi-brand retail saying it is not in the interest of farmers and small retailers.

At a meeting of 300 top BJP leaders, Gujarat chief minister Narendra Modi intervened in a debate on FDI in retail to suggest that the party take the issue to the village level and offered a systematic plan to negate the Congress' “reforms are back” campaign. He suggested that the party hold more than 5,000 public meetings across the country to highlight the BJP's objections, 10 in each Lok Sabha constituency. The Gujarat CM also suggested the BJP emphasise to traders and farmers that the Centre's decision to allow big foreign chains like Wal-Mart to set up shop would affect them adversely.

Party spokesman Prakash Javadekar later said the BJP will counter the government's decision to allow 51 per cent foreign equity in multi-brand retail by pointing out that 100 per cent FDI in back-end operations in the food processing industries has been allowed for a decade, but has yielded very low investment.

However, commerce and industry minister Anand Sharma in his curt reply cautioned the main Opposition that no government could arbitrarily reverse such decisions without inviting legal repercussions. “They cannot legally reverse a decision. We have signed bilateral investment protection pacts with a large number of countries which will all get invoked. I am appalled at what they are trying to do. They want to confuse and scare away investors. Those who will come and invest in India will be doing so in response to extant policy of the Republic of India. Policymaking is the prerogative of the elected government of the day. Investors will come after proper FIPB scrutiny.”

Meanwhile less than two weeks after the government’s opening up FDI many foreign retailers have discovered holes in the policy for multi-brand retail and expressed apprehensions about the government’s move to make it mandatory for them to invest $100 million (Rs 532 crores) in the first three years of operations, with at least half the money being compulsorily spent on back-end infrastructure. They want clarity on whether the norm requires them to spend additional money on supply chain and logistics even if they acquire front-end retail companies in India. They are also unhappy that expenditure on land costs and rentals will not be counted as investment in back-end infrastructure. Many retailers feel it was time to assess the feasibility of the policy and there is a long way to go before it can be implemented on the ground.