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Sonia's retail note goes to Kamal Nath

PMO asks his ministry to examine and give its views on the impact of FDI in the retail sector, reports Saroj Nagi.

india Updated: Feb 07, 2007 23:46 IST
Saroj Nagi
Saroj Nagi

Congress President Sonia Gandhi's letter to Prime Minister Manmohan Singh urging safeguards for small retailers in the backdrop of Wal-Mart's proposed entry in the Indian retail sector has set the ball rolling. On Wednesday, the Prime Minister's Office (PMO) asked the industry and commerce ministry to examine and give its views on the contentious issue of the impact of foreign direct investment (FDI) in the retail sector.

"The PMO sought details of the FDI policy in retail…We have sent our comments," commerce and industry minister Kamal Nath told reporters. He declined to give details, but said that the existing policy does not allow FDI in retail and no FDI agreement has been signed. But his ministry, he added, was looking into the issue in the context of what the PMO has asked for. In a television interview he said that the issue was being examined in the context of what the PMO has asked for.

The PMO was tightlipped about the ministry's response. "These are internal communications," a PMO official said.

The PMO's move followed Sonia's letter to the PM in which she said that several people had raised concerns about the possible impact of transnational super markets on livelihood of small retailers. "I thought I would convey this to you so that you may consider having the relevant issues properly examined before further decisions are taken," she wrote, referring to Wal-Mart's proposed entry into India.

US giant Wal-Mart has tied up with the local Bharti group for a retail venture and companies such as Carrefour of France and Tesco of the United Kingdom are also looking closely at the Indian market. Wal-Mart officials are expected to be in the country this month to sign the joint venture agreement.

Abhishek Singhvi, Congress spokesman, said that his party is not opposed to FDI in the retail sector and was not seeking a review of the policy. "We want a review in safeguards so that the aam aadmi is not adversely affected. FDI in retail should not be unregulated," he said. He said that Sonia's letter, which calls for regulatory safeguards, should be seen as the "middle path" on the issue and added that the communication does not restrict itself to FDI or multinationals but also includes big private domestic players. 

Singhvi did not elaborate on the safeguards required, other than mentioning that it was imperative to see that the supply chain was not monopolised. "The government will look into the micro part. The object of this letter was to alert," he said.

The entry of FDI in the retail sector is being opposed by the Opposition BJP as well as by the Left parties which gives outside support to the UPA government.  Sonia's letter has helped the Congress reaffirm its commitment to address the concerns of the common man, the centrepiece of the UPA's common minimum programme.

This is Sonia's third major intervention. Earlier, she got the government to hold in abeyance disinvestments of public sector units and roll back petrol prices.

She also spelt out the guidelines for setting up special economic zones when the matter came up for discussion at the Congress chief ministers' conclave at Nainital last year.

Email Saroj Nagi:

With inputs from Gaurav Chaudhary & Aloke Tikku

First Published: Feb 07, 2007 23:46 IST

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