It is important to articulate the economics of FDI in retail. It is illusory to believe that the market will be flooded with FDI in this space. Retailing is not an easy business - margins are wafer thin, large pieces of real estate are not easily available in prime locations and the supply chain logistics ranging from warehousing, cold storage to transportation pose a major challenge. More importantly, the Central Government’s role in retail FDI is minimal. The greater onus lies with the State Governments, as a maze of predatory laws, ranging from the Shops and Establishments Act to the APMC Act, amongst several others, falls within the State’s domain. Progressive States that wish to attract FDI in retail will encourage investments and vice versa. Either way, the fruits of organized retailing will not happen overnight, but will take several years. Let me conclude with a positive note: we have seen recently that that a saner sections of the Corporate India has come out, strongly in support of the FDI in retail. Hope for a small percentage of "Kirana" Shop owners, the large canvas of Indians do not suffer or their exposures to the international technology is not limited...!!].
The UPA committee, set up earlier this month to project a united picture in the run-up to the 2014 general elections, is also expected to discuss the Telangana statehood issue. Ms Banerjee was the only partner not to attend or even send a representative to the first meeting held on August 8.
Foreign Direct Investment or FDI in multi-brand retail is expected to be on top of the agenda today. Late last year, the Congress-led government had to reluctantly put a proposal to allow FDI in multi brand retail in cold storage after Ms Banerjee brought her ties with the UPA to the brink over the issue. Ms Banerjee contributes 19 crucial MPs to the UPA's tenuous total in the Lok Sabha and often flexes that muscle to get her way on important policy matters. The UPA's reputation of being afflicted with "policy paralysis" has come with such retraction on reforms.
On Saturday, Defence Minister AK Antony held an hour-long meeting with the West Bengal Chief Minister in Kolkata to try and seek her support.
Apart from Ms Banerjee, parties like Mulayam Singh Yadav's Samajwadi Party too have opposed the move. Mr Yadav, along with the Left parties and the Janata Dal(S) had shot off a letter to Prime Minister Manmohan Singh last month asking the government not to open up retail trade to FDI any further. Right now FDI in single brand retail is allowed.
The UPA coordination committee was announced last month to ensure proper functioning of the alliance, a demand that was made most recently by ally NCP during a stand-off with the Congress in July. Senior NCP leaders and Union Ministers Sharad Pawar and Praful Patel had threatened to quit then and had demanded that the Congress start taking along its allies on key decision-making.
Leaders of all UPA allies are part of this committee. Both Mr Pawar and his deputy Mr Patel represent the NCP on the panel. Mrs Gandhi heads the committee and Prime Minister Manmohan Singh, Defence Minister AK Antony, Finance Minister P Chidambaram and Home Minister Sushil Kumar Shinde are the other members from the Congress.
This is the first time in eight years of the UPA government that a coordination committee of alliance partners has been formed. During UPA-I, there was only a coordination committee between the Congress and Left parties.
Main News-body, Courtesy: NDTV Ltd