Rajasthan bars FDI in multi-brand retail

After Delhi government, now it is time for newly elected BJP government in Rajasthan to disallow Foreign Direct Investment (FDI) in multi brand retail in the state.

Chief Minister Vasundhara Raje has written a letter to Union Minister of Commerce and Industry Anand Sharma and conveyed her government’s decision.

“The state government studied the proposal and its ramification, and it is felt that permitting multi-brand retail would adversely affect various stakeholders,” the letter said.

“Retail trade, along with agriculture, is the largest generator of self-employment…Domestic retail primarily sources locally, whereas international retail sources globally, thus discouraging domestic manufacturing activity and hence reducing employment opportunities…The initial low prices facilitated by the deep pockets of retailers results in eliminating competition and ultimately raising prices,” it added.

Although BJP wants FDI in India but from beginning it has opposed foreign direct investment in supermarkets or multi brand retails as it may hit businesses of small shopkeepers.

As expected the decision was not gone well with The Associated Chambers of Commerce and Industry of India. The ASSOCHAM has slammed Rajasthan government for this policy.

“If one party reverses the decision of its rival dispensation upon change of guards, the policy and political risks for global investors would definitely increase in India, scaring them away,” D. S. Rawat, secretary general of ASSOCHAM, said in a statement.

Ms. Raje, however, said that FDI in real reduces jobs and not benefit farmers or small retailers.

“It is also a myth that FDI in retail leads to passing on the benefits to producers and farmers by removal of middlemen. If needed middlemen are removed, which itself is doubtful, the benefits of eliminating them would go largely to the retailers, rather than to farmers or producers,” Vasundhara Raje said.

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