AAP cancels nod to retail FDI in Delhi, ball in Centre's court

Delhi, considered a destination for foreign investment in multi-brand retailing, is nolonger one. The Aam Aadmi Party-led government on Monday gave it in writing that it was opposed to international chains such as Walmart, Carrefour and Tesco setting up shop here.

Delhi, till recently under Congress rule, is the first government to have withdrawn a nod to retail FDI after backing it initially. Rajasthan, now gone to the Bharatiya Janata Party (BJP) from the Congress, could follow AAP in asking the department of industrial policy and Promotion (DIPP) to remove it from the list of states which supported FDI in multi-brand. If the states exit from the list, only 10 states/Union Territories would back foreign investment in retail.

But there's some hope in the case of Delhi. While AAP has delivered on its poll promise by taking the anti-retail FDI stand, a senior government official indicated that Delhi does not have statehood and its "autonomy is restricted", unlike states which have opposed FDI in multi-brand retail. Inter-ministerial consultations were possible to discuss whether the Centre would have a final view on the issue, said a source. "In that sense, Delhi is a test case."

When asked on the state-versus-Centre decision on retail FDI in Delhi, DIPP secretary Saurabh Chandra told Business Standard: "We have put up the file (AAP letter) to the minister (Anand Sharma). Let's wait for the order."

He refused to comment on whether the Delhi government decision would be a blow to the multi-brand policy cleared by the Cabinet in 2012. Recently, UK-based Tesco became the first international chain to enter the multi-brand space with its Rs 680-crore proposal. But Tesco, in partnership with Tata group's Trent, will open stores only in Karnataka and Maharashtra, both ruled by the Congress, as of now. Currently, political parties, including BJP, DMK, Trinamool and Samajwadi, are opposed to retail FDI.

Arvind Singhal, chairman, Technopak, a retail consultancy, said, "AAP should not be blamed for delivering on its poll promise. It's the policy that is faulty."