NEW DELHI: The solicitor general of India, Mohan Parasaran, has endorsed Commerce and Industry Minister Anand Sharma’s view on policy reversals, saying that states like Delhi and Rajasthan cannot back out from allowing foreign direct investment in multi-brand retail.
The Department of Industrial Policy and Promotion (DIPP) had sought the law ministry’s opinion on whether states that had initially decided to allow FDI in multi-brand retail could opt out at a later stage. Parasaran has yet to formally respond to the DIPP.
“The policy is not a revolving door, so cannot be changed on account of a change in government. Once you have got in, you cannot get out,” Parasaran told ET. “FDI is the Centre’s subject anyway.”
He added that the policy decision was taken after consulting all stakeholders. “Such policy flip-flops will create an imbalance and send out negative signal to foreign investors,” he added.
In September 2012, the UPA government allowed up to 51 per cent FDI in multi-brand retail and left its implementation to the states.
Twelve states, mostly Congress led, allowed foreign retailers to open front-end stores. However, after the regime changes in December, the short-lived Aam Aadmi Party government in Delhi and BJP-led Rajasthan wrote to the Centre saying that they want to withdraw the earlier decision.
Meanwhile, BJP’s poll manifesto released on Monday promises scrapping of FDI in multi-brand retail. It says the party will allow FDI in all sectors that create jobs, except in multi-brand retail.
Sharma, the commerce and industry minister, said on Friday that he was awaiting the law ministry’s reply on the matter.
The Centre had given states the option to decide whether or not to allow FDI in their regions, Sharma had said earlier. “It is not that today I give the option, tomorrow I give another option. Domestic and foreign investor would be confused. We will ensure that there will be stability and predictability,” he had said.
Policy uncertainty and stringent sourcing rules have led foreign retailers to go slow on deciding whether or not to open shop here.
UK-based Tesco is the only foreign company to have entered into the sector, through a deal with Tata Trentin December. It plans to set up stores in Maharashtra and Karnataka, both Congress-ruled states.