Major deviations in FDI policy to benefit MNCs

Adamant Central Govt. notifies lenient FDI in multi brand retail policy.

Major deviations in FDI policy to benefit MNCs

 

A careful study of the policy of the Government allowing FDI in Retail Trade notified on 20^th September reveals the fact that the Government in order to provide more easy access to MNCs has diluted the conditions originally imposed in its policy earlier. The Confederation of All India Traders (CAIT) has strongly criticized the Government for such a step and considering the seriousness of the matter it has called an emergent meeting of its National Governing Council comprising of leaders of different States on 26^th and 27^th September at New Delhi to draw future countrywide agita tional strategy-informed CAIT Secretary General Mr. Praveen Khandelwal today in a press statement.

 

CAIT National President Mr. B. C. Bhartia and Secretary General Mr. Praveen Khandelwal in a joint statement today informed that as per the policy announced on 20^th September, the Govt. has allowed FDI in Multi Brand Retail Trade in all products but under disguise of fresh agriculture produce, it has permitted sale of grains and pulses in loose (unbranded) which is a major diversion from the earlier policy. This will directly attack the business of small Kirana Stores. This step has enough indication that the Government has a clear intention of allowing global players to do business in non- branded items also at a later stage.

 

Both Mr. Bhartia and Mr. Khandelwal further said that the Govt. has permitted to open front end retail stores immediately but has given a time period of 3 years to develop backend infrastructure. Though Govt is making statements that development of backend infrastructure is first priority. Further,  It is also not  clear that whether these FDI’s will have to be owners of backend infrastructure or they will do it indirectly and claim that they have invested in it.  Surprisingly establishment of cold storage and running of cold transport chain do not figure in list of backend infrastructure. Constantly the Government is referring to wastage of fruits and vegetables as a major issue and therefore seeking immediate requirement of Cold Storage  but it appears that the same has been intentionally not referred to in the policy  while defining backend infrastructure. It creates a major doubt on the intention of the Government.

 

The policy also mention that at least 30% of value of procurement has to be done from small industries with investment not exceeding US$ 1 million.  However, great relaxation has been given to MNCs to meet this requirement in total purchase of first five years and not year wise which means that MNCs will be at liberty to outsource even 100% procurement from anywhere over the globe even from the starting year of their operations and later on to meet the requirement of procurement of 30% from small industries In other wards it is not mandatory  for MNCs to procure at least 30% from Indian small industries right from 1^styear. Most surprisingly, the MNCs have been allowed to self-certify the conditions stipulated in the policy. There will not be any Government mechanism to regulate whether these companies are complying with the condition mentioned in notification.  It is an open fact that global retail giants are known for flouting the laws.  Thus whatever conditions have been stipulated in the policy will go redundant because of self-certification conditions. Interestingly such a facility of self-certification has not been given to any domestic company in any sector.

 

The trade leaders further said that the Government has publicized  that the retail outlets will be in cities with population of more than 10 lakhs. But in notification it is mentioned that MNCs can set up retail stores in the cities of their choice in such states which do not have population of 10 lakhs as per 2011 Census which means that MNCs will have a free hand to set up their retail stores anywhere in India.The trade leaders further said that in the backend infrastructure the policy has a mention of agriculture market produce infrastructure which is very dicey and needs to be defined.   

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For more information please contact CAIT, Secretary General, Mr. Praveen Khandelwal@9891015165, 9310199771.