PM may address nation today as FDI in retail comes into effect

NEW DELHI, Sept 20:
Against the backdrop of widespread uproar over decision on FDI, Prime Minister Dr Manmohan Singh is likely to explain to the nation tomorrow the reason behind the step and the benefits it would entail.
The Prime Minister’s explanation could be in the form of a written message or a televised address, sources said.
Singh is expected to spell out the reasons that prompted the Government to allow FDI in multi-brand retail.
He is likely to cite the difficult times facing the economy and emphasise that the step was aimed at pushing economic growth and generating employment.
The thrust of the Prime Minister’s message is expected to be that the step was taken in national interest.
After the Cabinet decision on September 14, Singh had said the step was intended to “bolster economic growth and make India a more attractive destination” for foreign investment.
“I believe that these steps will help strengthen our growth process and generate employment in these difficult times,” he had said and sought support of “all segments of public opinion” for this.
In his address, the Prime Minister is also likely to explain the reason behind the hike in diesel prices citing under recovery by oil marketing companies.
He could also put forth the Government’s stand on capping the number of LPG cylinders to six per annum.
Singh would also touch upon various economic reforms being pushed by the UPA Government.
Unfazed by opposition even from its own allies, Government today went ahead implementing its decisions to allow FDI in multi-brand retail and liberalise foreign investment in aviation and broadcasting sectors.
On a day opposition parties enforced a nation-wide bandh in which allies SP and DMK participated, Government came out with notifications implementing its reforms decisions taken last week.
While TMC, the second largest UPA constituent, is all set to withdraw its support and pull out its Ministers tomorrow, SP and DMK have also opposed these policies.
Under the notification relating to FDI in multi-brand retail, multinational companies can invest up to 51 per cent to open stores in 10 States and Uts, which have so far agreed to implement the decision.
“51 per cent FDI in multi-brand retailing, in all products, will be permitted …,” a notification by the Department of Industrial Policy and Promotion (DIPP) said. It said the decision will take immediate effect.
The Government also operationalised September 14 Cabinet decisions to allow 49 per cent FDI by foreign airlines in the domestic carriers and relax sourcing norms for foreign retailers investing beyond 51 per cent in single-brand retail.
In the most controversial area of FDI in multi-brand, the DIPP said the State Governments and UTs would be free to take their own decisions.
“Therefore, retail sales outlets may be set up in those States\UTs which have agreed, or agree in future, to allow FDI in MBRT (multi-brand retail trading) under this policy.”
Minimum amount to be brought in by the foreign investor would be USD 100 million and outlets may be set up only in cities with a population of more than 10 lakh.
At least 50 per cent of FDI in multi-brand retail should be in ‘back-end infrastructure’ within three years of the first tranche.
Investments in the aviation sector would be made under the government approval route and the parties need to comply with regulations of Securities and Exchange Board of India.
Earlier, no foreign airline was allowed to invest in Indian carriers directly or indirectly.
Besides, the decisions on permitting 49 per cent FDI in power exchanges and increase in foreign equity cap from 49 per cent to 74 per cent in the service providers like DTH in broadcasting sector have also been notified.
On multi-brand retail front, only 10 States and UTs have so far agreed to FDI. These are Andhra Pradesh, Assam, Delhi, Haryana, Jammu & Kashmir, Maharashtra, Manipur, Rajasthan, Uttarakhand, Daman & Diu and Dadra and Nagar Haveli.
Major States like Uttar Pradesh, Tamil Nadu, West Bengal and Gujarat are opposing FDI in retail.
The major domestic retailers welcomed the decision.
Future Group CEO Kishore Biyani said, “Finally FDI is here. So, that is a very good news. There is no threat to us from foreign retailers.”
Aditya Birla Group, Business Director (Apparel & Retail Business) Pranab Barua said, “We have to still wait and watch what happens at the State level. This will help the sector.”
Diluting the earlier norms in the single-brand retail, the DIPP said the 30 per cent sourcing by the global firms “will be done from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors”.
Swedish retailer IKEA, which planned to invest Rs 10,500 crore in India, had sought relaxations in this regard.
Meanwhile, Trinamool Congress is all set to break its ties with the UPA by withdrawing its ministers and the support tomorrow but the Government remained unfazed over its stability even as outside ally Mulayam Singh Yadav sent mixed signals.
With the Centre not in a mood to yield to her demands for withdrawing the decisions on diesel, LPG cylinders and FDI, Trinamool Congress Chief and West Bengal Chief Minister Mamata Banerjee today said in Kolkata that her party’s six ministers will submit their resignation to Prime Minister Dr Manmohan Singh tomorrow.
“We have already taken a collective decision. Our Ministers will submit their resignation. Commitment is commitment. We have also sought an appointment with the honourable President tomorrow, if he gives time,” she said in an apparent reference to plans to give a letter of withdrawal of support of 19 MPs to the Government.
Trinamool has six Ministers, including one of Cabinet rank, in the UPA Government.
Banerjee said there is no room for negotiations on the issue of FDI in retail and ruled out going to Delhi for any talks with the Congress leadership.
After Trinamool’s withdrawal of support, the UPA Government’s support in Lok Sabha will come down from 273 to 254 and the coalition will be heavily dependent on Samajwadi Party (22) and BSP (21) for its majority in the House.
For a simple majority, Government needs the support of at least 273 MPs in a House of 545.
But the Government remained unperturbed over any threat to its stability following Trinamool’s decision.
“We had enough friends yesterday, we have enough friends today. So, I don’t think why you should doubt our stability,” Finance Minister P Chidambaram told reporters in Delhi.
Asked whether the government would look for new allies, he said,” If we can acquire new friends, why would we not.”
Information and Broadcasting Minister Ambika Soni said the Government is stable as it has the support of 300 MPs in the Lok Sabha.
However, key outside supporter SP Chief Mulayam Singh Yadav shared the stage with Left and other parties to attack the government’s “anti-people” policies on FDI in retail, diesel price hike and the cap on supply of subsidised LPG cylinders.
He kept open the option of floating a Third Front, saying there was no better example than today’s “huge protests” to usher in a new political alternative.
Yadav, who unlike the Left leaders did not share the stage with BJP leaders in a nearby protest venue at the Jantar Mantar in the Capital, said SP was supporting the Government only to keep communal forces at bay.
“I have said this several times that we are supporting the Government only to stop communal forces (from coming to power). But we will not tolerate price rise,” he told reporters after courting arrest along with CPI-M General Secretary Prakash Karat, CPI leader A B Bardhan and former Prime Minister and JD(S) leader H D Deve Gowda.
He said if the UPA Government does not roll back its recent decisions immediately as per their demands “we will announce together a strategy to hold a big agitation.”
Asked whether this would lead to emergence of a Third Front, he said: “What will be a bigger example than this?”
Earlier, addressing the protesters, he said: “The government has been coming out with policies after policies that affect people of this country. The biggest loser of these policies especially diesel price hike is farmers. Farmers have been put to lot of trouble.”
Speaking separately to reporters, SP General Secretary and national spokesman Ram Gopal Yadav said any decision on continuance of support to the UPA will be taken after the agitation.
Reacting to Mulayam Singh Yadav’s statement on Third Front, Karat said,” Mulayam should give the lead both inside and outside Parliament.”
NCP chief Sharad Pawar saw no threat to the stability of the UPA coalition and dismissed demands for a special session of Parliament on the issue of FDI in retail.
The Union Agriculture Minister told reporters that Prime Minister Dr Manmohan Singh had flagged the issues of FDI in retail, hike in diesel prices and a cap on subsidised LPG cylinders at the first meeting of the UPA Coordination Committee also attended by the Trinamool Congress chief.
Pawar’s statement is at variance with Banerjee’s claim that she was kept in the dark by the Centre on the key issues before it took the controversial decisions.
At the same time he said Banerjee, at the UPA Coordination Committee meeting, had told she would meet the Prime Minister later to give her views on the three issues. (PTI)

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