New Delhi
28 November 2007
Notwithstanding the present bonhomie between India and the United
States, the prospect of fashioning a policy on foreign direct investment (FDI) that suits
Washington and accommodates big American corporate interests, at the expense of
domestic businesses, is beginning to pinch some in the ruling Congress party.
Prof PJ Kurien of the Congress party on Wednesday said in the Rajya Sabha that the
sense of the House is against FDI (foreign direct investment) in retail. Intervening in the
Question Hour, he demanded that the UPA Government should reverse its policy on FDI
in retail and disband two expert groups that are studying adverse impact of allowing FDI
in retail.
"What is the need of this study [when] the sense of the House is against FDI in retail?
The government should withdraw that study," Prof Kurien said, criticising his party and
government.
The government has mandated National Council for Applied Economic Research
(NCAER), India's premier economic research institution, and Indian Council for Research
on International Economic Relations (ICRIER), an autonomous non-profit research
organisation, to study adverse impact of allowing FDI in retail. The NCAER is focussing
on impact on agriculture and the ICRIER is tasked with undertaking a comprehensive
study.
Union Minister of State for Commerce and Industry Ashwani Kumar responded by saying
that the government is more than sensitive to the sentiments of small shopkeepers and
it is seized of their concerns. He said in his reply to the question posed by Amar Singh
and Abu Asim Azmi on the resentment among small traders against FDI in retail that the
government will not allow any company to breach or circumvent government policy.
In response to a question by a BJP member on reports of US retail chain Wal-Mart
entering India "through the backdoor", Mr Kumar clarified that the government has only
allowed FDI in retail for "single-brand" items. Referring to protests in Uttar Pradesh and
elsewhere in the country against a big Indian corporate house, the minister said that
there is "no embargo" on domestic companies wanting to enter retail trade.
The minister said that the NCAER and the ICRIER can be expected to submit their reports
"very soon." The government will consider taking further action only after studying the
recommendations or findings of those two organisations, he added.
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