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by Raj Chengappa, Editor-in-Chief — Anand Sharma , Union Commerce and Industry Minister 
When
the Union Cabinet announced on November 24, 2011 that it was permitting Foreign Direct Investment (FDI) of up to 51 per cent in multi-brand retail and 100 per cent in single retail, it was to signal that it was putting the economic reform agenda back on track.
But with Opposition parties bringing Parliament to a standstill over the announcement and the UPA government's key allies like Mamata Banerjee, West Bengal Chief Minister, opposing it, there is likelihood of the policy being derailed.
Anand Sharma, Union Minister for Commerce and Industry, 58, has had to face flak both for the timing of the policy announcement and pushing it through without building a national consensus. In an exclusive interview to Raj Chengappa, Editor-in-Chief, The Tribune Group of Newspapers, in Delhi on December 2, Sharma defended his government's decision and took on the dissenters. Excerpts: There has been widespread criticism over the timing of the policy announcement to allow Foreign Direct Investment (FDI) in the multi-brand retail sector as it brought Parliament to a standstill. Why do it now? This is the domain of the executive. It is an enabling policy which does not require any legislative approval. Since Parliament is supreme and is in session we reported it to Parliament. We followed a process which is transparent, democratic and inclusive. We acted out of sincerity and conviction, considering the present state of India's rural economy, the plight of the farmers and consumers, the lack of integrated infrastructure, unacceptably high harvest losses and an exploitative economy in rural areas. But if a major national initiative gets trapped in partisan politics that is very sad. Not just the Opposition but some of your allies say that they were not consulted and no effort was made to build a consensus before the policy was announced.
We cannot now make the policy sub-optimal. There will be no roll back otherwise we may as well not have a policy at all. We can erect a brick wall around India and say that this is a no go area. The policy for allowing FDI in the retail sector has been on the anvil since the NDA government's time. We started our process from July, 2010 and after intense stake holder consultations it went through an inter-ministerial process of analysing, collating and distilling it. After that, we went through another round of consultations and in December, 2010, a group of concerned secretaries met and made an initial draft for the consideration of the government which again sought responses from stake holders. After which there was another round of inter-ministerial discussions which culminated in a committee of secretaries meeting chaired by the Cabinet Secretary and its recommendations reached the government this July. When the issue was raised in Parliament on 3rd August this year, I had outlined the contours of the recommendations in the policy making it abundantly clear that it will be an India specific policy. There was no ambiguity left that we were going ahead with this. I am therefore surprised when we are told that the Opposition says they have suddenly come to know about this policy. But did you discuss it with your own allies like Mamata Banerjee of the Trinamool Congress? The Prime Minister was very keen that we should put in place a mechanism of consultation with our allies at the highest level. So I flew to Kolkata and I did discuss this with Mamataji. She made it very clear to me that given the West Bengal situation, its complexities and realities and that her party manifesto had stated that it will not accept multi-brand retails, she wanted a model that would be specific to West Bengal. She went on further to say that whatever is done the West Bengal government will not be able to accept it. So we made it absolutely clear that it is an enabling policy. The decision to implement it is left to individual states and at their discretion. During the consultation process which states expressed dissent? Apart from West Bengal, Tamil Nadu, Uttar Pradesh and even a Congress ruled state like Kerala did not want it. But at the same time there were many states who wanted it like Punjab, Haryana, Maharashtra, Andhra Pradesh, Rajasthan, Assam and Delhi. In the consultation process BJP ruled states Gujarat and Himachal had also asked for it. But now they are aligning with their party stand. The point here is that in a federal polity if five to ten big states want it, do the other states opposing it hold a veto over the policy for the country. That is the fundamental question. Those who say that I will not have it and I will also not allow others to have it gravely undermine India's federal structure. Was the Congress Party President Sonia Gandhi briefed about the policy before it was announced and is the party supporting it?
The Congress Party President was briefed on the broad beneficial impact. The Congress President does not get involved in nitty-gritty of policy making. She was very clear that whatever we do, we should ensure that the interests of the small farmers are absolutely protected and they get their due for their hard work. The second thing the Congress President specifically told us was that the micro and small industry's interests should be protected and to ensure that they are very much part of the process. But with so much opposition to the new policy will it succeed if only a few states adopt it? We have seen in the past that whenever any major initiative has been taken, it has met with stiff opposition of the Right and the Left combined. In 1985 when Rajiv Gandhi's initiative on computerisation, IT and communication was launched to empower India it was said that jobs will be lost, 20 peoples work will be done by one computer, sons and daughters will be jobless and there were major strikes by public sector unions. But look at the sector now and how it has brought India prosperity. Again in 1991, when economic reforms were rolled out by Dr Manmohan Singh as Finance Minister, they said that it is a backdoor entry of the East India Company, India will be colonised again. But see what happened after that. Would you be able to break the impasse in Parliament? We are talking to everyone and have been trying to take them into confidence. An adjournment motion is not a no confidence motion. I dare the Opposition to bring a no confidence motion against the government. We respect our allies' viewpoint which may be different than that of ours. We respect their reservations. It is a state's call to implement the policy. Are you willing to make further concessions to bring opponents on board? As a minister I would not like the policy to be tinkered with in any manner. We have put in enough safeguards, we have been very inclusive and democractic in our consultation, we have taken on board concerns of all sections. Therefore, we cannot now make the policy sub-optimal. Then which investor would be interested? Are we inviting them and putting in further barriers? There will be no roll back in the policy otherwise we may as well not have one at all. We can erect a brick wall around India and say that this country is a no go area. You said the policy was India-specific. How is it different from other countries? While other countries allow investment without any restrictions, here we have imposed a 51 per cent restriction; second, other countries do not impose a minimum threshold of investment, here we have imposed $ 100 million. Also, other countries follow the automatic route, but here we have put it under the approval route. Fourth, 50 per cent of the investment has to be done in rural India; fifth, 30 per cent minimum sourcing has to be done from micro and small enterprises. The sixth condition is that it will be allowed only in cities which have a population of more than 1 million. So out of 8,000 towns and metros in India, only 53 qualify for this. The seventh condition which is India-specific is that the interests of small retailers have been taken into consideration and they will continue to thrive and flourish. It means that a licensed retailer of India shall have the right to buy at discounted wholesale prices from the big retailers. Why open up the sector to FDI? Why not set up the infrastructure from the country's own resources? Why has this not happened yet? Because it requires enormous investments. The states cannot make such big investments and even the Government of India cannot make such a large investment in infrastructure. Also we are permitting FDI in other key sectors. For instance, foreign investment has come in highways, ports, airports, hydel projects, thermal power projects and in other important fields. If we have allowed FDI in these sectors, then why is the retail sector so sensitive. The fear is that India would be swamped by multi-nationals that would kill local entrepreneurship especially small shops. I do not want to be part of the thinking of those who lack self confidence and lack self respect. This was said earlier, when organised retail was allowed and all the big Indian corporates like Reliance, Birla and others came. The impact is that unorganised retails have grown and organised retails still remain in single digit — may be 6 to 7 per cent. So these are misplaced fears. Second when India allowed food chains like McDonalds, Pizza Hut etc, they said the Indian traditional eateries will all collapse. But they actually flourished and some of them have gone global. The same with the retail single brands like Ebony, Pantaloons etc which are Indian. When we allowed Marks & Spencer and others to come, the Indian retailers continued to flourish. Now Indian corporate houses have stepped out and invested in other countries because other countries have allowed them to do so. Look at what we are doing abroad and here we are panicking.
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