Delhi government can’t de-notify FDI in retail, says Centre

Industry Ministry rejects proposal for de-notification of FDI in Delhi

As the Centre and the Arvind Kejriwal government cross swords over the demand for suspension of four Delhi policemen, the two appear to be headed for another confrontation — this time over Foreign Direct Investment in multi-brand retail.

The Centre has rejected the Delhi government’s proposed de-notification of FDI in the State.

Highly placed sources in the Industry Ministry told

The Hindu that after FDI in retail was notified by the Ministry in a State, the powers to de-notify it was with the Centre, and not with the State government.

“We have decided not to de-notify the policy in Delhi, for it will send out a wrong signal to foreign investors that India is an unpredictable banana republic,” the sources said. The Ministry, however, is yet to communicate this to the Delhi government.

“The Centre’s policy is that we give the States an option to decide if they would like FDI in retail. Once they say ‘yes’ and the Industry Ministry notifies it, there can be no reversals,” the sources added.

As the Shops and Establishments Act empowers the Delhi government to regulate retailers, the sources said, the Kejriwal government could bar them from certain parts of the city. But, even under this Act, they may not be able to block FDI in retail as “a State government’s regulations cannot discriminate between foreign and domestic investors,” the sources said.

Earlier this month, the Aam Aadmi Party government had written to the Department of Industrial Policy and Promotion about its decision to reverse the Sheila Dikshit government’s approval of FDI in Delhi.