Karnataka finally opens its doors to FDI in multi-brand retail

Karnataka has joined 11 other states and union territories that have agreed to allow foreign direct investment (FDI) in multi-brand retail.

"Karnataka has also favoured the policy," Department of Industrial Policy and Promotion (DIPP) Secretary Saurabh Chandra said. There was a change in Karnataka's stand following the the change of government there after the recent assembly polls. The previous BJP-led government was against the implementation of FDI in multi-brand retail in the state.

The government had permitted FDI up to 51 per cent in multi-brand retail trading last year. Earlier this month, Himachal Pradesh also agreed to allow 51 per cent FDI in multibrand retail.

Maharashtra, Andhra Pradesh, Haryana, Rajasthan and Manipur are among other states that have decided to implement the decision. However, the government has so far not received any proposal for investment in multi-brand retail.

Meanwhile, the trade and industry bodies have given mixed reactions to the decision of the state government to implement the foreign direct investment (FDI) in multi-brand retail. While the Bangalore Chamber of Industry and Commerce (BCIC) has welcomed the move, the wholesale traders under the banner of Bangalore Wholesale Merchants’ Association have strongly opposed the move stating that it will lead to large-scale unemployment.

M Lakshminarayan, president, BCIC, said, "The decision by the state government to allow FDI in multi-brand retail thus joining several other forward-looking states in the country is a step in the right direction. This will not only induce a surge of retail activities in the state but also boost employment which will ultimately benefit the consumers and bolster the state’s economic growth."

Earlier, Saurabh Chandra had announced in Delhi that the Karnataka government has joined 11 other states and Union Territories that have agreed to allow foreign direct investment (FDI) in multi-brand retail.

"Karnataka has also favoured the policy," Chandra said.

BCIC feels that this move will pave way for several global corporations to set up shop in the state, which will directly spur infusion of fresh Capex and high-end technological innovations not only to benefit domestic players but also create a good experience to the consumers.

However, the chamber has requested the state government to make other regulatory changes both in the APMC and other related Acts to facilitate the investment in the retail sector so that they can operate with ease.

"This move is expected to  benefit the State in attracting investments, jobs and give impetus to the Agriculture and Horticultural Sector  with better realisations and also provide impetus to the Real Estate Sector," H V Harish, Senior Vice President, BCIC said.

Meanwhile, the Bangalore Wholesale Food Grains and Pulses Merchants Association has opposed the state government decision stating that it will be a disaster for the small scale sector across industry segments. "We strongly oppose this move. Few months back, we had staged a nationwide protests against the government decision. Now, the state government has joined other states and this will lead to large-scale unemployment in the retail sector. We will come out with a detailed action plan to protest the government move within a week," R C Lahoti, president of the Association said.

It may be recalled here that the BJP-led government was against the implementation of FDI in multi-brand retail in the state.

The Centre had permitted FDI up to 51 per cent in multi-brand retail trading last year.