With the Government still in the consultation phase in trying to arrive at a consensus on the contentious issue of allowing foreign direct investment (FDI) in multi-brand retail, Finance Minister Pranab Mukherjee on Friday virtually put the issue on the backburner stating it was still to arrive at a broad-based consensus.

Finance Minister Pranab Mukherjee, while presenting the Budget for 2012-13, also said a proposal to allow foreign airlines acquire up to 49 per cent equity in air transport undertakings is under active consideration. Following widespread opposition, including from its own allies and several states, the government suspended its decision to allow 51 per cent FDI in multi-brand retail. “Efforts are on to arrive at a broad-based consensus with state governments on allowing FDI in multi-brand retail up to 51 per cent,” he said.

In November last year, the Cabinet allowed 51 per cent FDI in multi-brand retail and 100 per cent FDI in single-brand retail. While the decision on FDI in the multi-brand retail sector has been held back, the government has gone ahead with allowing foreign investment in single-brand retail to 100 per cent from the earlier 51 per cent. The government is again carrying out consultations with stakeholders like farmer associations, consumer associations and food processing industry to reach on a consensus on the issue.

Commenting on the issue, Arun Singh, senior economist at Duns & Bradstreet said despite expectations of a reform-oriented budget to boost the growth of the domestic economy, the government failed to provide not only a reform agenda on subsidies or FDI front but also effective timelines on the much anticipated Goods and Services Tax (GST) and Direct Tax Code (DTC).

Dabur Ltd CEO Sunil Duggal said there is no consensus or move forward in permitting FDI in multi-brand retail and aviation and this surely was a missed opportunity. Expressing similar sentiments, Marico Group Chief Finance Officer and Chief Human Resource Officer Milind Sarwate said FDI in multi product retail would have helped streamline the value chain of distribution of goods from the farm to the consumer.

Analysts feared that the proposal to allow 51 per cent FDI in retail may take long before it sees the light of the day due to political differences.