‘FDI in multi brand retail doesn’t violate current agreements’

The government today said the recent decision to allow 51 per cent FDI in multi brand retail with conditions does not violate India's international commitments and agreements with any country.

Written by Agencies | New Delhi | Published: September 18, 2012 8:04 pm

The government today said the recent decision to allow 51 per cent FDI in multi brand retail with conditions does not violate India’s international commitments and agreements with any country.

The opening up of FDI in multi brand retail trading is a liberalisation measure and remains so with all the conditionalities,given the fact that currently FDI in multi brand retail trading is not allowed at all in India,an official statement said.

“The decision does not violate any commitments/ obligations arising out of India’s international agreements,” it added.

The statement comes a day after opposition BJP said India cannot make opening of stores by foreign multi brand retailer in any city subject to state government’s clearance as the country has signed bilateral investment agreements with 82 countries,under which no conditions can be put on foreign investors from those nations.

The statement by the Ministry of Commerce & Industry,however,reiterated the recent policy decision did not infringe on any such agreements.

Citing the case of Bilateral Investment Protection Agreement (BIPA),it said FDI approval does not fall under it as the agreement is a post-establishment investment one implying equal treatment to domestic and foreign investors,unless the limitations to national treatment are clearly spelt out at the pre-establishment stage.

“The FDI policy is a pre-establishment instrument and therefore not covered by BIPA,” the release said.

The government further said since FDI in multi-brand retail trading was not allowed when Comprehensive Economic Cooperation Agreement (CECA) and Comprehensive Economic Partnership Agreement (CEPA) were negotiated,none of these agreements are affected by the recently approved policy.

“Multi brand retail trading is classified as a service and therefore covered by the General Agreement on Trade in Services (GATS). India has not undertaken any commitments in this area under the GATS. As such,there is no impact of the policy on our commitments under the WTO,” the government statement said.

The policy of allowing FDI in multi brand retail says that it would be the prerogative of the states to allow setting up of stores.

“The policy nowhere provides that it is applicable only to certain states. The policy itself is a national policy and can potentially be applicable to all the states that are desirous of implementing it,” the government said.

Last Friday,the government had allowed 51 per cent FDI in multi-brand retail but left it to the state governments to permit opening of stores by foreign retailers.

FDI in retail will prove “Frankestein”: BJP

BJP today charged the Centre was creating a “Frankenstein” by allowing FDI in multi -brand retail which would give a free run to international market “mafia” and the party would come out with a tougher countrywide agitation against the government’s decision.

“The decision of FDI in retail would prove detrimental to Indian industries,traders,farmers,consumers and common people at large. It will prove ‘Frankenstein’ for Indian economy,” BJP’s vice president Mukhtar Abbas Naqvi said.

He said the party has already launched a week-long agitation against diesel price hike,LPG cylinder restriction and FDI in retail from September 17 and will chalk out a “more aggressive” nationwide agitation plan on price hike and scams of UPA at its three-day national executive and national council meeting in Haryana from September 26.

Attacking UPA policies,Naqvi said “our country is facing many challenges. The challenges are due to wrong and foreign market mafia-friendly policies as some international forces have hijacked the economic policies of the Congress-led government. It is also not known where they want to take the country.”

The BJP leader charged the government with being more concerned about addressing the concerns of foreign companies,credit-rating agencies and US dollar’s strength and Congress party had converted itself into a multi-national company of FDI.

“The UPA government believes that the people have given them the mandate to indulge in more corruption,raise prices and protect the interest of foreign market mafias,” he alleged.

Naqvi also targetted Rahul Gandhi for keeping quiet over the diesel price hike and FDI in retail. “Gandhi is seen doing photo sessions in some poor man’s hut or in the fields of a farmer but he is silent when the nation is confronted with burning issues like price rise,corruption and scams,” he said.

On UPA allies expressing displeasure over the price hike and FDI in retail,Naqvi said their “mere token opposition for the sake of it” is not enough.

“The people of the country do not want to listen to ultimatums,they do not want to listen to the demands of rollback. They want to see the seriousness and actions of all those who are supporting the government,whether from inside or outside,on the issues of national economy,national interests and issues affecting them,” Naqvi said.

“Government is working hand in glove with international market mafia which is why markets have fallen prey to dollar propaganda. Any economy that depends on fluctuations of dollar would not be successful,” the BJP leader said.

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