The FDI Dilemma

India Today - - UPFRONT -

The BJP is caught be­tween a rock and a hard place when it comes to 100 per cent FDI in

multi-brand re­tail. On the one hand, there is a de­sire to at­tract in­vest­ment to In­dia to go along with the party’s pro-busi­ness, pro-growth im­age and on the other, there is the trader com­mu­nity that forms the core of the BJP’s sup­port and wants to hold back the tide of for­eign in­vest­ment in the sec­tor. There is also the risk of irk­ing the strong swadeshi lobby within the party.

Ac­cord­ing to se­nior gov­ern­ment sources, Prime Min­is­ter

Naren­dra Modi has said the coun­try is not ready for such a pol­icy yet and had nixed the pro­posal from the bud­get.

So far, 100 per cent FDI is per­mit­ted in multi-brand pro­cessed food re­tail­ing; for­eign com­pa­nies can in­vest only up to 51 per cent in multi-brand re­tail. Multi-brand re­tail­ers are also put off by the byzan­tine rules, such as lo­cal sourc­ing. Is the dis­so­lu­tion of the For­eign In­vest­ment Pro­mo­tion Board, cited as one of the rea­sons for de­lays, an in­di­ca­tion that the gov­ern­ment is re­spond­ing to the crit­ics?

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