Thursday 20 September 2012

Can retail FDI policy really be implemented statewise?


Central government ministers have been claiming that FDI in multi-brand retail policy that has been announced on 14th September has a clause that the States which do not wish to allow FDI in multi-brand retail need not allow it under the shops and establishments act. I came across this opinion piece in The Hindu Business Line which mentions that this cannot be implemented because international agreements signed by the government of India with other countries call for a national treatment for investment from other countries.

The article says "In effect, what this means is that if a Nilgiris can operate in Chennai, a Big Bazaar in Kolkata or an Easyday in UP, the governments of Tamil Nadu, West Bengal or UP cannot prevent a Walmart or Tesco from opening shop. If the licence is denied under the Shop and Establishment Act, this can be legally challenged under the BIPA agreements. The entire country, including all State governments, is obligated under the BIPA agreements." 

This is an interesting point that I have not seen being raised or clarified by the government ministers. At least HBL should allow the government to clarify on this. The bilateral agreements can be accessed here.

PS: I sought clarification from Hindu editor who pointed out that "we have already carried a story yesterday that the international agreements do not impact implementation of FDI in states. the Government had also formally issued a clarification in this regards."
The GOI clarification can be accessed here.

1 comment:

  1. I sought clarification from Hindu Business Line who pointed out that "we have already carried a story yesterday that the international agreements do not impact implementation of FDI in states. the Government had also formally issued a clarification in this regards."
    The clarification can be accessed here:
    http://www.thehindubusinessline.com/industry-and-economy/government-and-policy/article3911318.ece

    ReplyDelete