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Feb 11, 2014 at 01:40pm IST

India Inc flays Kejriwal's decision to withdraw retail FDI from Delhi

New Delhi: The Delhi government's decision to withdraw permission for FDI in retail from the city state is drawing flak from India Incorporate. The Arvind Kejriwal led government is in talks with the Department of Industrial Policy and Promotion over the issue.

India Incorporate has expressed strong displeasure over the decision, saying the move was likely to hinder foreign investments flowing into the country. "It is unfortunate that the Delhi government has chosen not to allow FDI in multi-brand retail in Delhi. This will discourage International retailers planning to enter India," Chairman of CII National Retail Committee J Suresh told PTI.

ALSO SEE Delhi government withdraws permission for FDI retail stores

Terming the Delhi government's decision as anti-investment and one that sends a wrong signal to foreign investors, industry body Assocham said, "If one party reverses the decision of its rival dispensation upon change of guards, the policy and political risks for global investors would definitely increase in India, scaring them away".

"This direct negation without demonstrating a search for a viable alternative would hamper investment sentiment. Consumers would have benefited from choices of products at competitive prices. It has been proven time and again that both large multi-brand retail stores and small kirana stores coexist peacefully," Ficci President Sidharth Birla said.

As many as 12 states, mostly Congress-led, including Delhi had agreed to allow global retailers to open super market chains. The other states include Maharashtra, Karnataka and Andhra Pradesh. "The Delhi government's decision is bound to impact the overall FDI scenario not just in Delhi but also associated states like Haryana, Rajasthan and Punjab because Delhi is the hub for northern states," PHD Chamber of Commerce President Sharad Jaipuria said.

"According to our assessment, overall retail sector in the Delhi-NCR region has potential to attract FDI worth USD 50 billion in the next 5 to 6 years if supported with conducive policies. But due to this decision, it won't materialise," he added.

However, banker turned Aam Aadmi Party member Meera Sanyal, talking to CNN-IBN Deputy Editor Sagarika Ghose, said the party wants Indian business to compete first and then move towards reforms like the FDI.

In a major move, the Arvind Kejriwal government in Delhi has written to the Department of Industrial Policy and Promotion (DIPP) on not allowing FDI funded stores in Delhi. With this, Delhi has become the first state to withdraw permission for FDI funded retail stores.

The previous Delhi government under Sheila Dikshit had allowed FDI in multi-brand retail in Delhi. The DIPP is now examining the letter sent by the Delhi government on withdrawing permission for FDI in multi-brand retail.

Doing away with FDI was one of the steps AAP had mentioned in its manifesto before elections in Delhi in December 2013. Kejriwal had been opposed to FDI in retail. In 2012, Kejriwal had said, "The Walmart experience shows that farmers in the US were not benefitted, but deprived besides being a very bad employer."

(With additional information from PTI)