The FDI Dilemma
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?