The Rajasthan government on Friday scrapped FDI in multi-brand retail, the second government to do so after Delhi’s AAP regime following a change of guard brought on by the recent assembly elections.
The Vasundhara Raje government said it had written to the union commerce ministry on January 1 informing it of the decision. Pointing out that her government opposed foreign direct investment in multi-brand retail, the chief minister had on January 29 said in the assembly that the “previous (Congress) government gave permission to FDI in multi-brand retail without thinking”.
Rajasthan was one of nine states that in 2012 okayed the entry of international supermarket chains. Bharti-Walmart, Carrefour and Metro Cash & Carry already have outlets in the state’s wholesale segment. “If a duly elected state government formally notifies its willingness to implement the policy within its jurisdiction, it can’t retract unilaterally on such commitments,” commerce minister Anand Sharma told PTI.
“It is a clearly settled matter that FDI policy falls within the remit of the central government... to say a new government has the authority to withdraw its support to the FDI policy is bad in law. FDI policy in the sector has been discussed, debated and voted upon in both Houses of Parliament and has reached a finality,” Anand said.
Senior ministry officials said the government would soon be seeking the law ministry’s opinion on states withdrawing consent.
When the Delhi government reversed the policy on January 13, Sidharth Birla, president of industry association Ficci, had said, “This direct negation without demonstrating a search for a viable alternative will hamper investment sentiment for the state.”
British retailer Tesco, recently given the nod to do business in India, did not immediately respond on the development.