Click to play videoNew Delhi: Commerce Minister Anand Sharma has said that despite her silence, UPA Chairperson Sonia Gandhi supports FDI in retail. Speaking to Karan Thapar on Devil's Advocate, Sharma said that the Congress is united on the issue of FDI in retail.
Karan Thapar: Hello and Welcome to Devil's Advocate. How well has the government handled FDI in retail and how will it respond to its critic. Those are the two key issues I shall discuss today with the Minister of Commerce and Industry Anand Sharma.
After nine days of paralysis in Parliament, can you expect that announcing this decision slap bang in the middle of Parliamentary session, was the mistake? You have given your opponent a handle to challenge you and today as a result your government looks as if it is in crisis?
Anand Sharma: Well, the opponent have much to answer than the government. We didn't time it with Parliament. Well there can be two views - that why did we bring it now but this, has been there for more than a month or a year.
Karan Thapar: Except, that you knew that this is going to provoke opposition by doing it?
Anand Sharma: No, I thought they would be reasonable and accepting because the principle opposition party that's the one which is opposing it because of partisan agenda. I can understand the blinkered view and ideology of the Left. So BJP and the NDA.
Karan Thapar: Are you seriously telling me that you had no anticipation of the expectation that the row that's broken out?
Anand Sharma: Well it's the executive decision. That's the domain of the executive.
Karan Thapar: Except you could have taken it a month earlier, you could have taken it a month later why bang in the middle of Parliament?
Anand Sharma: I can tell you in straight away, we never thought about it because this was there, it was listed in the agenda it went through. It has gone through all processes; on the 3rd of August this year I had informed Parliament. So when they were informed and there was a detailed discussion on this subject, why should they then be reacting there, in the intervening period they could have written to us.
Karan Thapar: So, you are telling me that you were taken completely by surprise by the reaction from MPs and politicians and parties.
Anand Sharma: Well, I can understand that there are some who have been mislead because of the canards and apprehensions that are sought to be created. So misgiving I can address but motivated opposition is something which people have to see through.
Karan Thapar:Look for a moment on your own allies, Mamata Banerjee has said that she will always oppose FDI in retail for the simple reason in her manifesto, she has declared oppositely.
Anand Sharma: I entirely agree.
Karan Thapar: But, Why you are unaware even in her manifesto she was against it.
Anand Sharma: No I am not unaware because I had gone to Kolkata to speak to Mamata and she made it very clear to me. That was well before the Cabinet note was moved.
Karan Thapar: So you knew, she was against this?
Anand Sharma: Yes , but she asked one thing specifically that please make it absolutely clear that this will be at the discretion of the state.
Karan Thapar: Except that's not sufficient for her because it hasn't won her over. She continues to oppose it.
Anand Sharma: Well, let's see I think we have respected that wish. India is a federal country and everyone has to understand like the BJP is today saying that they will not have it in their states, we respect that two of the BJP states.
Karan Thapar: But come back to Mamata Banerjee because she is one of your allies and you discussed it with her you tell me.
Anand Sharma: Yes.
Karan Thapar: You said you were aware that in her manifesto she has opposed FDI in retail.
Anand Sharma: We respected that.
Karan Thapar: But then did you misunderstand the response she gave you? Were you expecting her public opposition?
Anand Sharma: It's not a question of misunderstanding or not understanding but we also should be clear in our approach that India is a country, a republic which has a federal polity. Now there are many states, big states of republic, which want it. So when a Central Government takes a decision you have to wait, you have to harmonise, you have to create a broad based consensus. There can never be unanimity, but we respect that. Mamata is a very valuable ally, Trinamool is a valuable ally and therefore, what they wanted we have put that in it.
Karan Thapar: Except for the fact that she is not won over by your argument. You are saying to respect her right to dissent but you don't want her veto to it for the rest of the states. She is not accepting that.
Anand Sharma:No let's leave she has not said that she is going to veto for the rest of the states.
Karan Thapar: She said that she can't accept it because it is against the manifesto.
Anand Sharma: No, that is for the province of the West Bengal let's not be taking into.
Karan Thapar: Another manifesto for the rest of India.
Anand Sharma: No, I don't think so because I am not clear on that. She didn't say that she is going to veto for the rest of the country and I am very clear in my understanding, tomorrow if Maharashtra says that I don't want to have it, I will not have the rest of the country have it. Tomorrow if Punjab and Haryana get up and say that we want it and we will see who opposes us, or Andhra. Listen these are subject in concurrent list therefore, the states
Karan Thapar: That I understand but let's leave that aside I want to concentrate, for a moment on your handling. Today the government looks isolated and people ask themselves a simple question. Why are Sonia Gandhi and Rahul Gandhi not expressing in public their support for FDI in retail? Are they against it? Is their silence ominous? What does it means?
Anand Sharma: Where's the silence?
Karan Thapar: They haven't said a word on it. I think at "Youth Congress Rally" the Prime Minister spoke up, Mrs Gandhi remained quiet.
Anand Sharma: Mrs Gandhi addressed at the subject.
Karan Thapar: Absolutely but on this subject she is silent, Rahul Gandhi is silent.
Anand Sharma: Listen , do you think the Congress spokesperson can come out and articulate complete support without the party endorsement.
Karan Thapar: You are making my point for me, if the support comes from the Congress Spokesperson but not the Congress President or General Secretary.
Anand Sharma: No, no Congress spokesperson.
Karan Thapar: It's making a telling point.
Anand Sharma:No, the Congress spokesperson never speaks without the complete authorisation of the party.
Karan Thapar: Except for the fact, when there is a crisis when the Prime Minister looks in the trouble and the Cabinet looks as if isolated. Surely you expect the Congress President to declare her support. You expect Rahul Gandhi to do so but they are not. I ask you why?
Anand Sharma: I think we are making too much of it, all what is very close to the Congress leadership particularly the interest of the small farmers, the interest of the small industry, cottage industry and the consumers.
Karan Thapar: In which case, why isn't Sonia Gandhi saying this is in the interest of farmer?
Anand Sharma: No, I think it's stretching it too far. The party stands united, the party is one. To which party does the Prime Minister belong to?
Karan Thapar: Alright I accept your word for it.
Anand Sharma: To which party, my question would be, to which party Prime Minister Manmohan Singh belongs or the Finance Minister Mr Pranab Mukharjee or myself?
Karan Thapar: When the Nuclear Deal crisis hit this country in 2008 and there was the initial period of silence from Sonia Gandhi and people pointed out that she didn't seem to be supporting the Indo-US nuclear deal. She, then went public. This time around when people are raising question about her silence on FDI in retail she continues to be silent, that's why I asked the question.
Anand Sharma: Well, I think I leave at that but I am absolutely clear that the party is united.
Karan Thapar: Let me bring the another aspect of handling of this issue. Instead of implementing it in an experimental and calibrated way, do you think you been over ambitious? When China introduced 1989 FDI in retail, they limited it to just two cities Beijing and Shangai and they put a cap on number of stores. You permitted it in 53 cities at one go with no limit on number of stores.
Anand Sharma: No, no hang on, that would come in the implementation guidelines. Number of stores, China is different country you must understand that, China has a different system you must not confuse China and India. We have not adopted China's model and America's model or European model.
Karan Thapar: Except that you have been much more generous than China was. China limited it to two cities in 1989 and you have extended it to 53.
Anand Sharma: Don't forget that China did it 100 per cent without any restrictions. We have put very restrictive conditions.
Karan Thapar: What about the number of stores, could you put a cap on them?
Anand Sharma: Listen this is to be done by the state government. Do you think the Government of India; the Union Government of India gives the trade licence and the shop license?
Karan Thapar: So, the state government have a right to impose the limit on the number of stores that can be set up?
Anand Sharma: No, no it is, the implementation is to be done by the states not by the Central Government.
Karan Thapar: So there could be some major efforts of further restrictions introduced by the states?
Anand Sharma: The policy, it's an enabling policy. We have made it clear that the state governments will decide on the implementations. They can accept it they can change it, they can tweak it. It's up to them.
Karan Thapar: They can tweak it ?
Anand Sharma: Yes, listen trade license and shop license and the shop and the establishment act is given by the state government.
Karan Thapar: Alright.
Anand Sharma: Government Of India is not here to give you license.
Karan Thapar: I accept that. You clarified that the states can tweak it if they want. Let's come to what I called the fourth element of handling that has caused certain amount of concern. People say that you might have misrepresented the case that you were trying to sell the country. For instance the governance background paper, officially release by the PIP says and I am quoting "30 per cent sourcing can be done from any where in the world and is not India specific." At your Press Conference on Friday you took that line but 24 hours later you changed you position and started insisting it was Indian specific.
Anand Sharma: The background paper is a background paper not an official statement.
Karan Thapar: It is released by PIB.
Anand Sharma: Yes but ok, it's clarification was sought, we looked into our own internal consultations. And I looked into it on my own reply in Rajya Sabha on 3rd of August and we were very clear that we have made a departure; we have made a departure to make it India specific.
Karan Thapar: So, the PIB paper is wrong?
Anand Sharma: No, no.
Karan Thapar: So, the PIB paper is wrong?
Anand Sharma: No, that was reflecting the WTO position which this country is signatory to but we have made a conscious departure for that as we did for the solar mission, as we did for IT.
Karan Thapar: So when people say you are either confused or contradicting yourself?
Anand Sharma: I was not confused nor contradicting my self. The statement which I made in the Rajya Sabha on the 3rd of the August is the final.
Karan Thapar: Except that on the Friday at the Press Conference you said "it was not just specific and in 24 hours you said "it was".
Anand Sharma: I didn't , I never said that.
Karan Thapar: The papers quoted you saying it.
Anand Sharma: The papers may have quoted, find on camera my voice whether I have said it . I said it will be of course the definition is as such what I said that it is only for Indian SMEs because the maximum limit is the investment up to one million dollars. Now one million dollars is five crore, when you go outside India, five crore is not the definition of SMEs.
Karan Thapar: Ok, I understand that. Let's now move away from the government handling and let me put to you how you respond to the criticism that has been made. You have gone to the public to say that FDI in retail will generate 10 million jobs in three years.
Anand Sharma:Yes, it will.
Karan Thapar: Why is it that Montek Singh Ahluwalia, who I interviewed just two days ago, repeatedly refused to endorse that figure, in fact he went public and he said he knew nothing about it.
Anand Sharma:Well Montek is the deputy Chairman for the Planning Commission. But I don't think that Montek was working on this number with us. We have studies and empirical evidence. Let me also take you back.
Karan Thapar: Where does this figure come from?
Anand Sharma: Listen, it's very clear, the standards set that what amount of investment and what amount of expansion and how many jobs it will generate.
Karan Thapar: What I ask is, is this a credible figure?
Anand Sharma: It is a very credible figure .
Karan Thapar: You didn't pluck it out of a hat?
Anand Sharma: No.
Karan Thapar: I will tell you why I asked this because "Business Line" has published a study which suggests that 'if foreign retailers acquire up to 20 per cent market share in India which is that they easily can, you will up losing eight millions jobs that is exactly opposite of what you are saying.
Anand Sharma: I am a bit surprised by this analysis because you have made it mandatory that 50 per cent of the investment will be in rural India. That's to create integrated infrastructure. Once you create that, you set up an agro processing industry and food processing industry, warehouses, cold storages allow me to complete. You are also going to start from the farm gate, sorting, grading and there then the next line starts pulping, juicing and pickling. Is it going to generate jobs or take away the jobs?
Karan Thapar: But ten million?
Anand Sharma:But there's a front-end also, don't forget that.
Karan Thapar: So you stand by the ten million figure?
Anand Sharma: I am conservative in 10 million.
Karan Thapar: It could be more?
Anand Sharma: Ten million in one year I am saying.
Karan Thapar: You actually said ten million in three but never mind, now you are saying ten million in one?
Anand Sharma: No, no You see I have re-looked and reworked the figures. In case of the BJP and NDA government, I have gone through their internal notes and studies, in 2002 the empowered group of ministers.
Karan Thapar: No, no come back to the employment figure.
Anand Sharma: Yes, the employment figure they said 8 million in 2002.
Karan Thapar: So what is your estimate now, what it will be at end of three years?
Anand Sharma: Well, depending on how many projects are set.
Karan Thapar: But it could be thirty million?
Anand Sharma:I am not talking thirty million.
Karan Thapar: But it could be in excess of ten million that you are saying?
Anand Sharma:No.
Karan Thapar: You said it.
Anand Sharma:It could be definitely in excess of ten million definitely, it could be 14, it could be 20.
Karan Thapar: This would be very reassuring to the people.
Anand Sharma: Yes it could be.
Karan Thapar: It's another matter whether they fully accept it, but those who do will be reassured?
Anand Sharma: Well I always will have sceptics to deal with. Any major initiative in this country in the last 25 years, 26 years has always met with this kind of scepticism.
Karan Thapar: Scepticism is often healthy. Let me bring up.
Anand Sharma: No scepticism is healthy; partisan agendas do not contribute.
Karan Thapar: I am not bringing up partisan agendas I am bringing people talking about it.
Anand Sharma: I am talking about the opposition.
Karan Thapar: A second concern, is the impact of FDI in retail on small retailers and what are called the 'Kiranas' shops. Studies done in Thailand suggest that in the five years after 1997 when the FDI in retail was permitted up to sixty per cent of the Thai owned grocery stores shut down. In Britain between 1981 and 1999 over 50 per cent of independent entrepreneur stores shut down.
Anand Sharma: I know what you are saying, let me respond to you in a straight way.
Karan Thapar: How do you know that it won't happen in India?
Anand Sharma: Have we adopted Thailand model or British model? It's India specific and it has India's signature. It has taken into consideration India's complexity, the socio economic realities, geographical diversity and also the interest and the concerns of the small retailers. So therefore, the small retailers have the right, a licence retailer to access a discounted wholesale price from the cash and carry point and the retailer the big retailer is obliged to give it to small retailer.
Karan Thapar: So, in other words a small retailer can get the benefits of the cash and carry discount that are available?
Anand Sharma: Absolutely and also we have an estimate that the small retail for the next two decades will grow, at more than 30 per cent.
Karan Thapar: You stand by that figure as well that the 30 per cent is often looked as if it is exaggerated figure?
Anand Sharma: Hang on, hang on allow me to make a statement now don't interrupt. Because when organised retail was introduced in this country the same thing was said. Organised retail today stands at 6 per cent, don't forget that this was said that what will happen to the small retail, the kirana stores.
Karan Thapar: So similarly small retail after FDI will go as well.
Anand Sharma: No, beyond that you have given me an example only of the first two years of China, in the next twenty years what has happened in China, how many small retailers are there why didn't we discuss Indonesia? Indonesia is a country similar to India, one of the most populated country after India in Asia, a developing country. In Indonesia they have allowed 100 per cent, they don't have the conditions of 30 per cent sourcing and 50 per cent in back-end infrastructure.
Karan Thapar: So you are saying to me…
Anand Sharma: But there the small retailer retains 90 per cent of the market.
Karan Thapar: So you are saying to me that Indian experience would be closer to the Indonesian one.
Anand Sharma: Or better than that.
Karan Thapar: Rather than the Thai one?
Anand Sharma: May be the better.
Karan Thapar: Okay. Let's then put another concern to you, Arun Jaitley writing in the Economy Times, has said that FDI in retail will be a very bad impact on the manufacturing sector in Indian and let me give you his explanation, he says that India has the high cost manufacturing base as a result of which foreign retailer will source a variety of everyday items from low cost country like China that will affect growth in Indian manufacturing and also lead to job losses.
Anand Sharma: Well can I tell you first of all this informed opinion Arun Jaitley should have been giving to his own Cabinet when they prepared a note for 100 per cent FDI. Now moving away from that, let me be very clear even without this policy big retailers, global retailers are sourcing out of India, whether it is Tesco whether it is Marks and Spencer and more importantly…
Karan Thapar: But they are required to sell cheaply when they set up departmental stores in India, therefore, they could source from China because China's manufacturing goods are cheaper than India's.
Anand Sharma: No, hang on, I am sorry they are not required to.
Karan Thapar: They will want to.
Anand Sharma: No, I am sorry.
Karan Thapar: Or you are putting a stop on that?
Anand Sharma: Listen they are safeguards, don't forget that there is safeguards duty, anti-dumping duty and which defines it with clinical clarity, which defines with absolute clarity that if there is even the threatened or feared injury to domestic industry the state steps in .
Karan Thapar: So there will be some check in terms of competition?
Anand Sharma: I don't think that's going to happen and I don't buy Arun Jaitley's argument about the cost of manufacturing because China is already escalating number one, second thing this fear and this doubting Thomas' I would like to say that they should look at the reality. Has IKEA come to India, do they have the single store in India, the answer is no with a capital N, but the fact is that they are doing for their global operations 30 per cent sourcing from India. Why does Arun Jaitley not comment on that?
Karan Thapar: Except IKEA comes under single brand retail not multi-brand retail.
Anand Sharma: But 30 per cent of sourcing is from India.
Karan Thapar: I take the point you are making that you are disputing Arun Jaitley's claim.
Anand Sharma: Absolutely.
Karan Thapar: You believe in fact there is no threat to manufacture.
Anand Sharma: No.
Karan Thapar: Let me come towards, perhaps what is the biggest potential benefit that FDI in retail will bring and ask you to tell me on the basis of your research and your analysis. What do you think will be the impact on farmers, farm livelihood and farm income?
Anand Sharma: First the farmer will get the better returns for his soil, definitely much more than what they are getting now. Women in rural areas, young people in rural areas will get work because of the integrated value change, which we seek to create in rural India. Third, the consumer will get the benefit, fourth manufacturing will get a flip because if you make it mandatory, 30 per cent sourcing, actually it is much more. I have seen it with my own eyes Karan, if you travel, I have travelled all over the country that what is being made in India is being sold in New York and in London.
Karan Thapar: For a moment, stick to farmer's will. Farm incomes go up substantially?
Anand Sharma: Yes.
Karan Thapar: What will be the impact for FDI in retail for urban consumers?
Anand Sharma: At least 15 per cent less if not 20.
Karan Thapar: Things will cost 15 per cent less?
Anand Sharma: That's what, it starts ruling down.
Karan Thapar: So what you are saying is both farmers and urban consumers, farmers will get more income and urban consumers will be able to buy cheaper?
Anand Sharma: Well, let's not forget that as of now if farmer gets Rs 5 say for a vegetable, India's post harvest losses are unacceptably high for fruits and vegetables, close to 40 per cent and if farmers gets Rs 5, you Karan and me at the retail outlet in Delhi will end up paying Rs 35. So where is this middle income, these intermediaries where is it going.
Karan Thapar: I take your point. What will be the message that India sends out to the outside world if FDI in retail becomes a reality? How will the outside world thereafter view India as an investment destination?
Anand Sharma: Very positively, that this is the country which has self confidence, which is forward looking, which has vision and commitment to its own future.
Karan Thapar: And will FDI in retail also be an adequate response to critics of the government like Azim Premji, Deepak Parekh even Mukesh Ambani?
Anand Sharma: Well, I am not saying about individuals, the issue here is there were talks for long time for policy paralysis in crisis of governance.
Karan Thapar: This ends it?
Anand Sharma: The manufacturing policy and now this, in less than one month is the two major policies rolled out and this is not because we have responded to the critics. This was the work in progress for more than a year.
Karan Thapar: You have given me three or four reasons, why farmers, why individual consumers, why the outside world looking to India as investment destination will be pleased by the policy, but you also know that your opponents are against it, your allies have doubts about it. Many people in the party are questioning it. If FDI in retail doesn't happen, if it is either rolled back or put in
Anand Sharma: Why should it be rolled back ? We have acted out of conviction, carefully thought it through. We will talk to our allies, we are talking to them, we respect them. Our party MPs, if some of them, very few out of 207, two have express reservations and we are responding to them.
Karan Thapar: In which case my last question, when will be the notification of the rules made public, it was supposed to have happened this week , it clearly hasn't.
Anand Sharma: No, it is a process.
Karan Thapar: When will it happen?
Anand Sharma: Well the process minister doesn't deal with the process, the civil servant.
Karan Thapar: Is there the deadline for that process or does it go around forever.
Anand Sharma: No, it doesn't go on forever.
Karan Thapar: Is there no other way of putting in abeyance for the whole policy?
Anand Sharma: No way, no question.
Karan Thapar: You are sure?
Anand Sharma: Absolutely.
Karan Thapar: Will it happen before the end of this calendar year?
Anand Sharma: Well, I am sure now again the question of timing. First we are being told why did it, didn't do it later.
Karan Thapar: The world wants the clear answer, I've run out of time. Will it happen before the end of calendar year?
Anand Sharma: I am saying it has already happened the rest are formalities.
Karan Thapar: Anand Sharma, a pleasure talking to you.
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