Thursday, November 24, 2011

Mart liberalisation scales Trinamul wall - Cabinet clears retail FDI despite Dinesh protest, Sharma assures Mamata of state’s rights

http://www.telegraphindia.com/1111125/jsp/frontpage/story_14797417.jsp
Mart liberalisation scales Trinamul wall
- Cabinet clears retail FDI despite Dinesh protest, Sharma assures Mamata of state's rights

New Delhi, Nov. 24: The cabinet today unlocked the retail market for foreign direct investment, braving the Trinamul Congress's objections but assuring Mamata Banerjee earlier in the day that state governments would have enough leeway to protect the interests of farmers.

The most significant of today's decisions is the clearance to 51 per cent foreign investment in multi-brand retail, which will allow the entry of giants that are already household names in a country with an insatiable appetite for shopping.

The decisions do not require the approval of Parliament, where they would have been ambushed by the Left and also the BJP, and an executive order is enough to formally lift the hurdles. The UPA is keen to flag the retail liberalisation as a sign of its commitment to reforms at a time some industrialists have complained of a "policy paralysis".

At the cabinet meeting that stretched for over two and a half hours, Trinamul's sole representative Dinesh Trivedi voiced reservations and said his party was opposed in principle to the relaxation.

However, sources said, the Congress ministers requested that the measures be cleared. Commerce minister Anand Sharma, who was piloting the steps, explained that they would actually help farmers in states like Bengal by cutting out middlemen and preventing wastage of surplus produce.

Bengal is the largest producer of rice, vegetables, fish and pineapples and the second-largest producer of potatoes and accounts for about 10 per cent of the edible oil output in the country. However, potatoes often sell at as low as Rs 2 a kg in wholesale markets controlled by political parties, while they retail at over Rs 20 a kg in most metropolitan cities and at Rs 10 a kg in Calcutta.

Sharma had started the "explanation" mission early in the day when he met Mamata at a trade event in New Delhi.

Soon after the two exchanged notes, Mamata seemed to have relented somewhat. The chief minister hinted at a way out of the logjam over the FDI measure, stating that she would work "in the interests of farmers".

Mamata, who responded to questions, said: "Let the matter (FDI in retail) come up, we will discuss".

"We are always pro-farmers. We can keep the country smiling only because of farmers and industry. Let industry smile, let agriculture also smile," Mamata added.

Sources said Sharma, who along with Jairam Ramesh, was sharing the dais with Mamata, passed on a note that promised reservation for small-scale industry, higher prices for farmers who will be allowed to sell directly to retail chains instead of through middlemen and a mandatory rule on retailers to set up cold storage chains.

Mamata's office neither confirmed nor denied the note.

Other sources said Sharma assured Mamata that the provisions would allow the governments in states to protect the interest of farmers and prevent retailers from setting up shop if they do not agree to honour the commitments. They said Sharma also offered help in drawing investments to help industrialisation in Bengal.

Officially, Trinamul remains arrayed against FDI in retail and Mamata has asked Sudip Bandopadhyay to raise the issue at the business advisory committee of the House and seek a discussion in Parliament. As executive decisions do not require parliamentary ratification, if such a discussion is held, it could be merely used to formally record the objections of MPs of Trinamul and other parties.

The fact that Trinamul has not completely blocked the measure but merely registered its protest is being seen as a tactical move taken after indications of help in resolving the state's debt problem.

Mamata refused to say as much but told another questioner that "the Centre can help by reworking the state's debt". The chief minister hastened to add that she was not begging for any sops.

Ramesh, who shared the dais with her till the end, was effusive in his praise, saying: "The chief minister's persuasive powers are unique… the Centre will listen to her."

The retail FDI move itself could open the floodgates to retailers like Walmart, Tesco, Sainsbury's, Carrefour and K-Mart's to enter the nearly $600-billion market.

Industry hailed the government's decisions. Shopper's Stop vice-chairman B.S. Nagesh told PTI: "I welcome FDI in retail. Capital is required for the market whether it comes from domestic or foreign investors, it will help grow the sector in the next 3-5 years."

He added that "there will be no impact on the domestic industry as there is enough market. At the end of the day, the consumer will benefit."

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