People's Democracy

Resolutely Oppose Notification on FDI in Retail

The Polit Bureau of the Communist Party of India (Marxist) issued the following statement on September 21, 2012.

THE CPI(M) strongly protests the policy notification on FDI in retail trade issued by the government. Notwithstanding the widespread opposition to FDI in multi-brand retail trade, the government has gone ahead with the notification.

The rules announced by the government for FDI in multi-brand is designed to serve the interests of MNCs like Wal-Mart, TESCO and Carrefour. The investment floor of 100 million dollars (Rs 550 crore) is insignificant for the giant retailers like Wal-Mart which are multibillion companies.

The restriction that foreign retail outlets should be in cities with over 10 lakh population is also irrelevant because these are precisely the urban centres which the MNCs want to access as they are the most lucrative segment of the market. “Furthermore, the rules provide that in states/union territories which do not have cities having a population of more than 10 lakh, foreign retail outlets may be set up in cities of their choice.” Thus foreign supermarkets can be set up in all parts of the country and in a wider range of urban centres.

The condition for making at least 50 per cent of the investment in ‘backend’ infrastructure is being cited to argue that this would lead to more cold chains and other logistics, benefiting the farmers. International experience has, however, shown that procurement by MNC retailers do not benefit the small farmers. Over time, they receive depressed prices and find it difficult to meet the arbitrary quality standards.

That the government is bent upon promoting FDI in retail at the cost of domestic interests is clear from the dilution of the conditions set for FDI in single-brand retail. Earlier, the rule was that for FDI above 51 per cent in single brand retail, there was a mandatory sourcing of at least 30 per cent of the value of products sold from Indian “small industries/village and cottage industries.” Now this has been diluted. It is stated that instead of mandatory sourcing it is “preferably” from small and medium enterprises etc. Further, the definition of small industries has also been done away with.

By this policy announcement, the Manmohan Singh government has taken the single biggest step of destroying the livelihood of the largest number of people engaged in retail trade in India.

The CPI(M) will resolutely wage the struggle to get this anti-national decision rescinded.