Battling to dispel the perception of “policy paralysis,” the Manmohan Singh government on Friday unleashed big-ticket reforms such as allowing 51 per cent foreign direct investment (FDI) in multi-brand retail, 100 per cent in single brand retail and 49 per cent in civil aviation.
The Cabinet Committee on Economic Affairs, which met under the leadership of Prime Minister Manmohan Singh, also decided to allow 49 per cent FDI in two power exchanges and increase the limit from 49 per cent to 74 per cent in the broadcasting sector. It announced that 100 per cent FDI in single brand retail would be notified soon.
The 49 per cent FDI in aviation will permit foreign airlines to pick up a stake in domestic carriers, many of which are struggling to stay afloat for lack of funds.
The Cabinet also announced disinvestment of its equity in four public sector companies to raise Rs. 15,000 crore.
The measures drew a strong protest from the Trinamool Congress. It set a 72-hour ultimatum to the government to withdraw the 51 per cent FDI in multi-brand retail and the increase in diesel price. The BJP and the Left said the unfortunate steps were taken under foreign powers’ pressure.
“We will soon notify the guidelines for 51 per cent FDI in multi-brand retail. It has been left to the States to implement the decision on allowing global chains such as Walmart, Tesco and Carrefour to open… outlets in their territories. The Cabinet had taken this decision on November 24, 2011, but had to suspend it following uproar in Parliament. After a long-drawn process of consensus with the stakeholders, including various Chief Ministers, it has been decided to notify the decision. Let us not confuse consensus with unanimity. For unanimity, we will have to wait in eternity. This decision has consensus,” Commerce and Industry Minister Anand Sharma told journalists.
The Chief Ministers of Delhi, Assam, Maharashtra, Andhra Pradesh, Rajasthan, Uttarakhand, Haryana and Manipur, Jammu and Kashmir and the Union Territory of Daman and Diu and Dadra and Nagar Haveli expressed support for the policy in writing, Mr. Sharma said. But the governments of Bihar, Karnataka, Kerala, Madhya Pradesh, Tripura and Orissa expressed reservations about it.
Keywords: FDI in retail, multi-brand retail, UPA government, Commerce Ministry
Opening up of Retail with emphasis on strengthening the back end operations should be welcomed. But, Political parties in various states would not allow this. The politicians in these States would send their children to Australia/USA for higher studies and get branded items for their children/for themselves and would have Foreign Liquor in their home. But when they come before Public they would come in dhoti/kurta- Pyjama to propagate that it is not alright for the masses. If they oppose it would be hypocracy of the first order. Let us see how far this goes in various states.
FDI in retail are one of the few steps that need to taken to save the economy , that not showing any growth. The Think tanks should be careful about the clauses that will govern the business model, where there should be no compromises. Of course with the straight forward clause that the procurement of raw materials should only be from the domestic market, FII was a success story during the growth times but it’s time to check the other side of the coin , no doubt FDI will bring in cheers in the times to come. FDI in retail is going to help the economy grow for sure with many job's and business opportunities, the SME’s should see the benefits in times to come
I second Gayathri. Let common sense prevail.
All those supporting FDI without really understanding what they are supporting,
please watch following video on youtube "The World According To Monsanto" and
"Super Size Me" on YouTube... You will understand which type of companies we are
getting in the name of FDI...
I disagree with the writer. We all know the current system is rotten.
Under current system farmers and consumers are losers. Middle men and some big kirana stores are winners.
If FDI is implemented, to some extent the beneficiaries will farmers and consumers. Also the big retailers. The main losers will be middle men. To some extent some kirana stores.
Under current system the middle men is the one who is controlling everything. The goods we purchase like shampoo, soap or any other consumer goods which we buy from stores which is supplied by middle men may be counterfeit which looks and smells like the real one. You will never know. Monitoring big retailers will be easier and we can hold them responsible for service, quality and price.
Since the big walmart or tesco cannot be in every street corner, small kirana stores can still do business at street corners or in neighborhoods where people don't want to travel to a big retail supermarket just to buy a pack of salt.
It's good to see a government capable of bold decisions.This highlights the positives in a govt decision making body. The UPA govt has embraced this decision after countless rebuttals and reviews within the parliament, and core committee as well.
Yes, there are some definite apprehensions, but complete dependency on such factors halt the growth figures of a nation.Perceptions that underline the negatives of FDI are of no use if you can't table a solution in the parliament in terms of policy amendments that ensure a balanced regulatory and growth environment.
Well to end this I'd simply say, that we depend on the decisions of learned people to direct the course of a nation, so we should trust them and help them ahieve the dreams of a nation
Now M.M.Singh has become SINGHAM at last .
Dependence on a foreign country that too like ruthless USA that believe nation can prosper only by robbing other countries economically would ruin our country's economy.Think of sixties when we had to depend on USA for food grain to sustain our PDS system.After green revolution this dependence vanished.Similarly if we build our infrastructures,manufacturing units,power projects increase area of cultivation of arable land that are still lying untapped [about 47% of total arable land area]we may very well build a self sufficient economyand extend irrigation facilities with funds that are lying idle with our indigenous industries and big PSUs
Awesome! So very, very happy to hear this! Congrats to the Government.
Sniff sniff I think I smell a FOREIGN HAND in all this and I also smell the fresh
LAUNDRY. And the Bogus organization of Standard and Poor, concocted by multi
national corporates to cry out Downgrading . This allows their puppet governments
to quickly wave a wand over their gullible sheep who don't know that Standard and
Poor is A HOAX And so it goes on. Too bad
newspapers don't indulge in investigative journalism any more and also find it more
lucrative to go with the flow or enjoy the benefits of paid news.
When a foreign hand gets here with one billion dollars and LEAVES INDIA with TWO
BILLION DOLLARS in both hands, India becomes POORER by one billion dollars on the
global economic scale.
This may be a very good news for the govt in its efforts to save its face from the coalgate scam but this reform is going straight in the face of the common man who runs a kirana store round the corner of your street trying to fend for his family and children.Where will he go?
Prosperity cannot come at the cost of mowing down these people.
If you are poor you cannot get rich by renting your home to a wealthy
person neither wearing a Tie and cleaning toilets will qualify it as a
quality job. All those who are calling it a bold decision and
will create jobs is just cheating Indian people who is being fooled by
the corrupt corporate lobby with the help of a corrupt congress govt
to pass this ill fated policy. Nowhere in developing countries has
farmers and common man ever benefited by FDI in retail. Even in the so
called western Hub of Phillipines its the local driven SM malls which
could create a change and not Walmart's. China benefited by Walmart,
not the Chinese consumers. That was mainly because China has a low
cost production and manufacturing advantage which Walmart couldn't
ignore and was forced to source from China for their Global chain.
That advantage does not exist with India which means we will be dumped
with foreign products made in China , and cheap grains and vegetables
from countries like Vietnam.
Diesel and LPG price hiked,lpg subsidy up to six,petrol and diesel now in oil company's hand,government is only a viewer,In future FDI will decide their prices. After all Congress knows they will not come in power next term,We should make a law as Prime minister should be a lok sabha member,rajya sabha members have no accountability to people directly.
If Mr. singh is a LS member he will think about next election, people,voter etc.
I have not been a supporter of the Congress for the last few years. I am also not happy with the 'silence' of our Prime Minister. All the same I feel that one should not oppose whatever proposals are brought forward by the UPA government. No proposal can be cent percent is correct. Coming to the decision of 100 per cent FDI in single brand retail, I think there is lot of merit in this and that one should give a try. In any case it has been left to the State Governments to take a final call. Let us wait and see the results wherever it is implemented and then take a final decision.
This is all awesome news. Many years from now, people will talk about this day in the same manner in which we nowadays talk about 1991 when the first reforms were unleashed. Thanks to those 1991 reforms, we live a more comfortable life, earning more, with better options in terms of goods and services. Similarly, this set of reforms will take us even higher in terms of our economy, benefitting millions of Indians in several ways.
No doubt there will be several people opposing these reforms, as indeed there were in 1991. Most will be opposing just because they don't like the govt. or because they have been fed the wrong information about the potential impact. So they will be opposing on account of just plain politics or stupidity. Hopefully the govt. will stick on to their resolve and implement these reforms.
UPA is throwing kitchen sink to save the falling rupee. But FDI in retail is the wrong answer and is very myopic. Right answer is to cut deficits (eliminate all the useless freebie schemes which have made people lazy), improve infrastructure, improve industry and fix the regulatory environment so investment in infrastructure and industry can flourish. UPA is taking India to a dangerous zone.
Govt decision of allowing FDI in almost all sectors is good ,but it is very important factor to keep in mind that, the raw materiel they are buying should be taken directly from our farmers.
It's not FDI that we need to bring food prices down but a SPIRITUAL AWAKENING.
Every religion teaches that it is life giving to give food to others, and to give life is to
be like God. There is plenty of food in the markets and small stores around India, but
it is unscrupulous traders who keep jacking the prices up unreasonably so they live it
up The high prices in shops are all set by the TRADER MAFIA which get together and
decide to have ONE HIGH PRICE for every item so a few very rich people shopping at
their stores can make them rich while the common average bread earner just looks
at the price and puts the item down. In small towns this is a very cruel practice as big
cities tend to have restaurants that make up profit because of large numbers served
and so can keep prices down. In little towns those numbers don't exist and sadly the
high income wage earner does not exist either.One small town trader closed shop
next to my home as there are many poor people in this neighborhood.
we have again freedom fight against foreign country
This useless UPA Government must be sent home. No Congress Party any more .....
Dr. Manmohan Singh's another economic experiment on 120 crore people's struggle and existence
I protest from my heart. Our towns across India has only one surviving economy,
the small businesses. Vast majority of these small business are small retailers. This
one blow will kill all of small retailers eventually. Second is Small manufacturers,
these will die killing millions of our jobs.
USA had flourishing manufacturing and flourishing town economies till around
1970's. If you see the curve of big retail growth and perishing of these town
economies you will see it all.
My worry, if an economy of USA's size takes 30-40 years to reach the no return
point being witnessed since 2008, it will take much lesser in India for 2 reasons.
One because these world retail biggies have learned it all since last 3-4 decades,
its just expansion for them; second because In India our small businesses are not
strong yet.
The government over the last 30 years instead of reforming Indira Gandhi's Price
fixation at market yards does this. God bless us while these old horses do whats
good for Big!
i am not a supporter of UPA but Mamata and TMC should be kicked out of
government for hindering every positive step taken by government for the
development of nation...
The UPA-II has fired an ace after a long time. When everything appeared to be over and there was hopelessness on part of this government, it has managed to strike back with vengeance.
The story is "Manmohan fights Back".
Way to go Manmohan Ji!!
This humongous step is going to revive the current economy.
I think, at times it is very much necessary to take tough decisions without the support of coalition & opposition parties. Opposition parties bark without any futuristic cognisance, the only thing they want is to get rid of this government at any cost. Same BJP was supporting FDI when BJP was in power, but now it is for the people to see. And dont even ask about Mamta, i think she needs a break.
Better late than never.
This will produce local jobs,better products and competition.
The Consumer will benefit.
Mr.Manmohan Singh should have taken this measure earlier, nevertheless
the decision taken by UPA governmment will certainly boom the economy of
India. Let us stand by and give support to bring back the Indian economy
on track!
A Gift in contemplation of death - FDI. Both the Congress Govt. and
the so called Indian industrialist have lost the spirit and the
ability of Fighter - Indians. We do not now have persons like Bhabha,
Kurien JRD Tata GD Birla Jawaharlal Nehru and even Adi Godrej, who
even in times of no foreign support and all hurdles established pure
Indian industries without any - FDI.The I. T. Industry in Indian
developed without FDI and became a challange for the developed
economies.Where are those people now. Cong. under Sonia and Manmohan
Singh look only to and for the Western powers - the Dollar economy.
This “consensus decision” will have far reaching implications on the
economy, basically because multi-brand retailers will gradually
introduce foreign equivalents to Indian (desi) items, which would
slowly destroy the local talent and entrepreneurship, hurting the
economy without any chance to recuperate. The general observation is
that the small shop owners would also be denied their bread and
butter, throwing more population under the ambit of BPL category.
FDI could be at 100% for multi-brand retail and civil aviation also. It
is 2012 and not 1744 and there is no 'Robert Clive' now. 100% FDI will
boost Foreign Currency reserves.
"First over next few years all the small shops will start
disappearing.Then over time farmers and others will realize they
suddenly have 10-15 main retailers to sell to, so they will be getting
less and less money for their produce.Also local suppliers will slowly
start seeing their goods replaced by foreign goods.This is short term
money inflow and long term unemployment and unproductive, The local
retailers, farmers and manufacturers will be decimated. Profit margin
in retail will be going abroad.The east India company is back in a
different form."
For people who argue that it will create competition and reduce the
price
Small Players won't be able to reduce their profit margin beyond
certain level and they won't be able to diversify/expand their
business by introducing multiple products due to lack of funding, lack
of bank loans (don't say banks gives commercial loan, if you do
believe that governments statements, just go and try getting a loan)
Just a thought. Reminds me of the arrival of East india Company.
I am glad the UPA govt finally took some gutsy steps to revive the economy. But let us see how long before the govt gives in under political pressure like it the last time.
As for the states like West Bengal or Bihar who expressed reservations about this policy, someone should let their CMs know that it is voluntary for the states to implement this policy in their respective domain. If Karnataka doesn't want FDI in retail then Karnataka won't have any FDI in retail but for that matter Andhra Pradesh should not be prevented from having FDI in retail its AP!!
Only hope is on Mulayam and Mamata who should throw out this corrupt UPA government for allowing FDI in multi-brand retail which will create unemployment in SMEs constituting about of 40 per cent of total labor in India. Cheap Chinese products will kill all manufacturing which is against national interest and will benefit China and America. American unemployment of 8 per cent today is only in these sectors.
I guess our prime minister is now hoping for rave reviews from the Washington Post and the Times...
This action was obvious after President Mukherjee's departure from Finance ministry, elevation P.Chdambaram's elevation to that post, berating of Manmohan's berating by American media (Time, Washington Post), appointment of Rajan to the advisory position in Finance ministry. Manmohan was groomed and placed in the role. He departed from the script. So there ---
This is terrible
We should welcome it. We want USA and Europe companies to come and invest in IT(Information Technology) but not in other sectors. We do not want MNCs to enter into India but we stand in line for all kids of visas at outside foreign consulates for more dollars and better qualifty of life. Then whats wrong in foreign nations to invest it? If opposition parties are right then why do not they do agigation to STOP investments in IT and STOP taking OUTSOURCE jobs from UK and USA etc. What a hypocritics society rules India? Party in power and party in opposition both act same way and same rule oppose what you do to get votes for 2014.
A controversial decision by center with Affirmative action left on
states???
This was expected from our economist-PM manmonhan singh... Fruits or
Flaws-awaiting results...
Kudos to the Govt. for FDI in retail/aviation and disinvestment. The
Govt. should move on and introduce Reforms despite Opposition. Heavens
will not fall and didn't the present PM and the then PM usher in
Liberalisation 20 years ago turning topsy-turvy the planned State
economy.
Most welcome decision. It will help customers in getting quality
products from abroad and indigenous products to maintain international
standard.
But care must be taken prevent retails giants to press others with
their iron fist.
At least the West led by the US won't see PM Singh as a sorry figure
now, but hail him as a comeback-hero.
this is outrageous !! its a disaster for small and medium business owners. Walmart and other chain of shopping outlets destroy the business of ordinary indian businessmen. And ofcourse the profit will be going to foreign companies. Hillary clinton is on the board of directors of Walmart. i guess she got what she wanted.
Yes, it is about time. It is great news for Indian farmers and the consumers - the middle-men need to learn to adopt to new technologies in supply chain mgt.
It is incongruous that just one town each only covered from Karnataka
and Andhra Pradesh, viz Bangalore (5/ 8.50 million) and Hyderabad ( 6/
7.75). Uttar Pradesh too has seven cities covered under the list like
Kerala.
In case the entry permission is fixed for cities with 2 million (20
lakh) population or above ( instead of 53 cities), only 19 cities will
be falling under the purview of the opening up of FDI. Thus just two
cities will be covered from both Tamil Nadu (Chennai and Coimbatore)
and Kerala (Kochi and Kozhikode).
At this time I would like to know what action our government had taken
in respect of the report received from UNI Global Union, Switzerland,
the global trade union umbrella body cautioning the evil effects of
Foreign Direct Investment (FDI) in multi-brand retail sector ,
highlighting the threat of displacement and oppression of poor working
class in our country. It is to be noted that in the Rajya Sabha,
Minister of State for Commerce and Industry Jyotiraditya Scindia had
briefed on this report on Wednesday 22- 08 - 2012. The report of UNI
Global Union that represents around one thousand trade union
associations throughout the globe had compiled records on abuse of
workers and their mass displacements while there were no statutory
regulations to ensure safety and welfare of personnel.
I hope the government sticks by its decision and does not wilt in face of opposition from the constant trouble-maker Mamata Banerjee. She does not understand economics and must stop formenting trouble all the time. I'm all for lower food prices, better food distribtion from villages to cities and better prices for farmers (by cutting out the middleman). For people who love kirana/mom-and-pop stores, please continue to shop there - no one is forcing you to change where you shop. But, stop forcing me to shop there as well. I don't want to! I want FDI in retail.
I think the government did the right thing. If some states do not need these reforms and their people agree to the state government's decision, those states can refrain from the 51% FDI.
But we pray that those states should not place vote bank politics infront of the national economic growth.
Mamatha and Mulayam Singh should wake up now and throw out the anti-national decision by pulling out of this corrupt government. It is going to create so much unemployment in SME sector due to import of cheap Chinese products of daily use by Walmart and others, that labour which constitute 40 percent of total Indian labor will suffer like USA with its 8 per cent unemployment. FICCI, CII and FAPCI should also get worried because they will be closed down.
Is there a consensus among all the parties on this?
FDI in retail is a retrograde step. It would creates jobs for our youth to sit as
checkout boys and girls in Superstores owned by multinationals 'indian branded'.
Indian farmers, sooner or later would lose their ownership.
Farmers would initially get more, and the consumers would get better quality food
and products.
Agricultural products and milk from abroad would flood in, and our dignity would
flood out.
US and Europe don't want our youth to migrate, but they have no hesitation in having
our money and energy of the younger indian population.
India is a virgin land for exploitation, and corruption of the politicians would return
us back to dismal old days with a different name.
FDI is not 'Foreign Direct Investment', it is Foreign Direct Influence in what we eat
and drink and what our politicians do with our youth.
Can't TATA's and BIRLA's buy the produce from our farmers and sell us?
FOREIGN DIRECT INFLUENCE 'FDI', IS BAD
Good news for consumers, but will paralyze Indian local retail supply
chain. Too much dependency on foreign suppliers for house hold needs
will change consumer behavior and may start new phase of extinction of
some local commodities.
At last.....good decision....we can not play politics on growth of
country. And some element who will lose high profit due to this are mis
guiding people.
Please Email the Editor