VEERING FROM SWADESHI
executive director, tax and regulatory services, EY, “The FDI policy change will definitely reduce the timeline for cross-border M&As in the pharma sector which will lead to more funds coming into India in this sector.” The Modi government has set itself on a collision course with its ideological parent with its FDI reform. The RSS’s economic think-tank, the Swadeshi Jagran Manch, has called the government’s decision to allow 100 per cent FDI in food processing for trading in e-commerce a ‘betrayal’ of farmers and traders of the country.
The Modi government has so far maintained an uneasy truce between the Sangh and the BJP over allowing FDI in multi-brand retail. This is because the RSS and the party count traders among their core supporters. They will now be directly hit by the liberalised FDI norms. Expecting this for a while, this year their fears have come true. Beginning with Arun Jaitley’s budget this year, the government has been nudging at FDI in retail. The budget permitted 100 per cent FDI in food retail. The new policy now permits FDI in food processing, much to the RSS’s ire. This is why investors are waiting to figure out how far they can go and decide on their investment patterns for selling food products manufactured and produced in India.
SJM national convenor Kashmiri Lal told this will move towards the centralisation of the food segment and eventually not allow diversification of food choices for consumers. “This is against the core philosophy of the RSS and their thought leaders,” he said.
Finance minister Jaitley has tried to placate the RSS leadership, without much success. The Sangh’s belligerent stand is making investors nervous. FDI for selling food could be a good first step, they say, it should not be the last. Their worst fear—the RSS might force the government to allow state governments to decide. Many BJP chief ministers are uncomfortable opening up this segment. This is why several major retailers are pushing for an exemption from the ‘state government approval’ clause as one of the preconditions to their investments. US retail giant Walmart, at the forefront of opening up this sector, too, is treading cautiously. “We are awaiting the policy document and will study it before making any commitment,” Krish Iyer, president and CEO, Walmart India, said. Walmart has so