Supreme Court dismisses plea against retail FDI

In a record judgement, the Supreme Court has rejected

a petition against FDI in multi-brand retail saying, “Consumer is king and if that is the philosophy working behind the policy then what is wrong in it.” In a relief to the Centre and UPA governement, the Supreme Court on Wednesday upheld the government’s proposal to allow foreign direct investment (FDI) in multi-brand retail trade (MBRT) saying the move did not suffer from any unconstitutionality, illegality, arbitrariness or irrationality.

A three-judge bench of Justices R M Lodha, Madan B Lokur and Kurian Joseph referred to the Centre’s counter and said the decision to allow FDI in retail has a legal basis – Foreign Exchange Management Act 2000. The court welcomed what it called the focus on benefiting the consumer by “enlarging the choice of purchase at more affordable prices and by eradicating the traditional trade intermediaries/middlemen to facilitate better access to the market [ultimate retailer] for the producer of goods.”

The Bench also noted that the policy to allow FDI, up to 51 percent in retail trade was only an enabling policy. “The State governments/Union Territories are free to take their own decisions in regard to implementation of the policy in keeping with local conditions.” It said the Department of Industrial Policy and Promotion (DIPP) was empowered to make policy pronouncements and there was no merit in the contention that the Government of India had no authority to formulate the FDI policy.

During the hearing, the bench said the policy of FDI in multi-brand retail was discussed and debated in detail in both Houses of Parliament before it was voted in favour of the government. The bench noted that the policy was prepared after detail study of the economy of developing countries like China, Brazil, Argentina, Singapore, Indonesia and Thailand where FDI is permitted upto 100 percent, local retailers co-exist along with organised retail and are integral in the organised retail chain.