Modi to tell Obama that India is game for FDI in retail in a staggered way
The Narendra Modi government is going hammer and tongs in preparing the best possible climate for United States President Barack Obama’s India visit in the last week of January so much so that one can even expect the unexpected – the BJP government seriously mulling over the possibility of permitting FDI in multi-brand retail in a staggered manner over phases.
During his official talks with President Obama, PM Modi is expected to convey his sincere intent to unleash sweeping economic and administrative reforms. He is likely to do so by talking of two big-ticket reforms that the Americans have been waiting for years – FDI in multi-brand retail and further increasing FDI limit in defence to 100 percent which the Modi government had recently raised from 26 percent to 49 percent.
Modi government’s nod to FDI in multi-brand retail would be a biggie considering the fact that the BJP has consistently opposed the UPA government’s concerted moves in this direction. Interestingly, this is Modi’s desire, not the party’s. He has been telling party leaders not to be unduly apprehensive of allowing FDI in multi-brand retail.
This shows the mega transformation of the BJP as a political party and the fact that with the complete change of leadership the party’s policies too are undergoing a major evolution and what was a big no-no just a year back may now be welcome for the BJP.
Significantly, as chief minister of Gujarat Modi had opposed FDI in multi-brand retail.
On 14 September 2012, Modi had criticized the UPA government’s decision to allow Foreign Direct Investment (FDI) in multi-brand retail sector saying that it would mean immense harm to small shopkeepers, hit the domestic manufacturing sector, create joblessness and would mean dumping of cheap foreign goods into India.
Modi realizes that if India has to register impressive growth in double quick time, nobody is better placed in helping India in this regard than the US because whole of Europe continues to be a sob story while Japan is still battling recessionary conditions. In contrast, the American economy has recorded impressive growth in last two consecutive quarters.
The Americans have said that in last one decade the Indo-US bilateral trade has quintupled to $100 billion and there is every reason to believe that the two sides can register a five-fold increase and take it to $500 billion even more quickly.
There is another big talk emanating from Washington that Modi must have latched on to: that Washington would like to see India becoming a ten trillion dollar economy fairly quickly from the present $1.8 trillion GDP.
FDI in multi-brand retail and 100 percent FDI in defence can be the mother of all decisions that can lead to massive inflow of foreign investments in India. The Indian retail market is estimated to be worth $500 billion and one of the top five retail markets in the world by economic value.
The UPA government had ushered in massive retail reforms for both multi-brand and single-brand stores in November 2011 but the BJP and several other parties stifle opposed the move.
The first sign of the Modi government making a U-turn on FDI in multi-brand retail came a few months ago when the Foreign Investment Promotion Board (FIPB), at its meeting on 29 August, cleared two FDI proposals in multi-brand retail sector. The FIPB had issued a release saying the cleared proposals pertained to duty free stores by Flamenco International to bring in Rs 40.5 crore and Miami Perfumes to bring in Rs 10 crore as FDI.
The Modi government has already taken to the ordinance route in preparing an investor-friendly climate by clearing the Insurance Bill and Land Acquisition Bill and a similar exercise is in the pipeline for the mining bill as well. By doing so the Modi government has expressed its resolve to go ahead with economic reforms even though it does not have majority in the upper house of Parliament.
Needless to say that the Congress will be accusing the BJP government of yet another U-turn and the Left parties will be hauling the Modi government over coal. But this is what the Modi government is going to do. This is what clear majority in the Lok Sabha can do for a government.
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