Under attack from the Opposition and former political allies over allowing foreign direct investment (FDI) in supermarkets, the government today said only 18 cities in the country would be able attract foreign investment in the sector. There is a condition in the retail FDI policy that allows only cities with more than 10 lakh population to set up retail outlets with foreign investment in them.
While only 53 cities will comply with that condition but if after taking into account the fact that only 10 states/union territories have so far agreed to permit FDI in multi-brand retail, just 18 cities in the country would roll out foreign-owned stores, Communications Minister Kapil Sibal told the Lok Sabha.
The minister opened the debate from the government side after leader of the Opposition Sushma Swaraj said small retailers would lose business after big retail chains come into the country. The debate started with Swaraj moving a motion under asking the government to withdraw its decision allowing FDI in multibrand retail. Simultaneously, Saugata Roy, Trinamool MP, and Hassan Khan, an independent member from Ladakh, moved two separate amendments under section 48 of the Foreign Exchange Management Act, 1992 that allows both the houses of Parliament to force changes in government notification within 30 days of it being tabled.
Countering Swaraj’s argument that multilateral and bilateral trade agreements would not allow the conditions imposed by the government on foreign investment to be a success, Sibal said the retail FDI would not fall under the bilateral investment protection agreement (BIPA) with any country since the conditions would be pact covered only post-establishment conditions and not pre-establishment. Besides, India was not a signatory to services agreement under GATTS and retail being a service would not attract any regulations under the World Trade Organisation.
In his speech later, Samajwadi Party supermo Mulayam Singh asked the government to withdraw FDI in retail saying that it was not in the interest of anyone and warned the UPA of a political fallout in the next Lok Sabha elections.
The debate saw heated exchanges between the Opposition and treasury benches when Swaraj was repeatedly interrupted by the members of ruling United Progressive Alliance. Both the sides charged for working against the interest of the farmers. Deriving confidence from the Samajwadi Party and Bahujan Samaj Party support for mustering numbers defeating the Opposition motion, the government agreed to undergo a voting on the two motions last week.
The debate on multi-brand retail began today in the Lok Sabha, more than two months after the Union Cabinet allowed 51% FDI in multi brand retail. Voting on the matter is expected tomorrow.