Retail FDI gets LS go-ahead

Last Updated: Wed, Dec 05, 2012 21:51 hrs

Aided by the absence of the Samajwadi Party (SP) and the Bahujan Samaj Party (BSP), the United Progressive Alliance government on Wednesday won the Lok Sabha vote on allowing foreign direct investment (FDI) in multi-brand retail, besides the enabling rules under the Foreign Exchange Management Act (Fema).

The final numbers showed 253 members of Parliament (MPs) voted in favour of the government decision on FDI, while 218 voted against it.

This was the first time an executive decision on FDI had been voted upon. The victory, however, was seen more as numerical than ideological. Leader of the Opposition in the Lok Sabha Sushma Swaraj pointed out, of the 18 who spoke, 14 opposed FDI in retail. “Going by their speeches, the numbers should actually translate into 282 against FDI in retail and 224 in favour of it,” she said.

SP (with 22 MPs) and BSP (with 21) staged a walkout ahead of the voting, bringing down the total number of MPs present in the House to 502 and the halfway mark to 251. Of the 502 present, only 471 voted. As there were no abstentions, some chose not to vote. Though the Dravida Munnettra Kazhagam (DMK), a government ally, had yesterday said it was opposed to the decision to allow FDI in retail, its MPs were present in the House and voted on Wednesday.

After yesterday’s debate, the focus of the speeches from the government’s side on Wednesday was on how the move would help farmers. The Opposition’s contended FDI in retail was not only bad for the country but there also wasn’t a parliamentary consensus on it.

Replying to the debate, Commerce Minister Anand Sharma said the FDI policy was a guiding policy and it was up to states to accept or reject it. “No one can tell an elected government what to choose and what not to,” he said.

  • Rajya Sabha: The debate now moves to the upper House, where debate starts on Thursday and voting is expected on Friday
  • Foreign chains: If the retail FDI policy is safe after the Rajya Sabha vote, foreign chains will start strategising on their India plans
  • Headway may take time: Go-ahead in Parliament may not translate into rush of foreign money into India, either from existing or new players, as they would wait for the general economy to improve and for more states in India to allow foreign-owned chains

The policy allows retailers to set up outlets with foreign investment only in those cities that have more than one million population. Though 53 cities in the country meet the population criterion, only 18 of those fall under the 10 states and Union Territories that have agreed to permit FDI in multi-brand retail.

He countered the charge of not taking stakeholders on board despite a commitment by former finance minister, now the President, Pranab Mukherjee. “After December 7, we spoke to farmers’ bodies again. Twelve such bodies were called and what they said we have in writing. Consumer forums were also called and consulted and 17 of those and six bodies of food processing industries gave us their views in writing.” The government had also sent letters to all chief ministers after which 11 states were in favour, seven opposed and three states asked for further clarifications, he added. All of these were contradicted by the Opposition.

While the enabling change under Fema would still be open to amendment by MPs till the expiry of the mandatory 30-day period, the Rajya Sabha will take up the FDI issue tomorrow, after which the House is expected to vote on Friday.

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