The Retail ruckus

The main opposition party BJP, which is protesting strongly against the UPA government’s move to allow foreign direct investment in retail, had seven years ago promised to open up the sector to foreign competition. “Organized retail trade on the international pattern will be promoted as a new engine of growth for trade and employment through appropriate legal and fiscal measures. 26% FDI in retailing will be allowed. Sourcing of Indian products by foreign retail chains will be encouraged,” BJP’s manifesto for the 2004 general elections had said in the section on trade and investment. However, the party reversed its stand before the 2009 elections, deciding to oppose FDI in retail and to protect tiny and small vendors. It is sticking to that position, with Gujarat chief minister Narendra Modi stating on Monday that he was aligned with the leadership’s decision to oppose FDI in multi-brand retail. “My stand is the same as that of my party BJP and which is in the interest of the nation,” Modi tweeted. The 2004 manifesto came around the time the NDA government commissioned a report from research agency ICRIER on the pros and cons of letting in foreign retailers. However, by the time ICRIER submitted its report, NDA had lost power to UPA. While the Congress-led government restricted itself to allowing FDI in singlebrand retail, it refrained from permitting global chains to set up multi-brand stores in India mainly due to pressure from the Left parties which were part of UPA-1. In the meanwhile, BJP also changed its position and categorically said in its 2009 manifesto that it will not allow foreign investment in the sector. “The BJP understands the critical importance of retail trade in the context of employment and services provided by them, and thus favours a dominant role for the unincorporated sector in retail trade. Towards this end, it will not allow foreign investment in the retail sector. After agriculture, the retail sector is the largest employer of nearly four crore people,” the manifesto said. It then went on to promise safeguards for small and tiny vendors besides loans at 4% and a pension scheme for them. What led to the change of stance is not known. When contacted, a party spokesman denied that the opposition party had ever promised to permit FDI in retail.