That the Indian government’s decision to implement Foreign Direct Investment in India state-by-state was myopic is now evident. PTI reports that Rajasthan is the latest government to change its stance after a change in government, where the BJP has taken over from the Congress. With this, Rajasthan follows Delhi in withdrawing support to FDI in retail, after the Congress lost to the Aam Aadmi Party. This means that only 10 other states remain: Andhra Pradesh, Assam, Haryana, Kashmir, Maharashtra, Manipur, Uttarakhand, Daman & Diu and Dadra and Nagar Haveli.
The Indian government had introduced FDI in Multi-brand retail in September 2012, with the following riders: firms are allowed to buy up to 51% stake, with a minimum FDI limit is $100 million, companies have to invest half of that amount in infrastructure like cold-storage chains and warehouses, and that at least 30% of the goods to be sold will need to be sourced from local partners. Note that the Indian government already allows 100% FDI in business to business e-commerce ventures, and cash and carry wholesale trading. So far, only UK-based Tesco’s proposal to invest in the sector has been cleared by the Indian government.
The BJP Opposed To FDI In Multi-Brand Retail; Unclear On E-commerce
We hope this isn’t about cutting the nose to spite the face, in a state versus central government situation, but the fact is that the BJP had opposed FDI in e-commerce in India.
It’s view FDI in e-commerce is still not clear. Arvind Gupta, Head of the BJP’s IT Cell, responding to a query on the party’s stand on FDI in Ecommerce in August last year had said that the political party was going to review Industry needs because “More and more businesses want to operate out of India. FDI in ecommerce is a huge issue because companies are dying here,” adding, on a lighter note that “we opposed FDI in Retail, which was opposing FDI in Ecommerce. Two negatives made a positive.”
The party still hasn’t made its stand on FDI in e-commerce clear, and we hope this move from the Rajasthan government doesn’t derail the central government’s review of the policy on e-commerce. Read MediaNama’s submission on FDI in E-commerce, sent to the central government.
– India Approves 51% FDI In Multi-Brand Retail
– Arvind Gupta, National Head Of BJP’s IT Cell, On E-Commerce, CMS, Trolling, Freedom of Expression & More
– FDI In Ecommerce: MediaNama’s Submission To The Indian Government