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Group links Indian government with alleged FDI scam

By RJ Whitehead , 23-Oct-2012
Last updated on 25-Oct-2012 at 08:57 GMT

Group links Indian government with alleged FDI scam

According to India’s leading trade representative body, ministers have been making deals with multinational corporations that have led to the government quietly amending the fine-print of its move towards foreign direct investment in multi-brand retail.

The Confederation of All India Traders (Cait) alleged that the government’s latest statement on FDI last month is seriously at odds with its initial proposal in November last year. Questioning what has caused these variations in policy, Praveen Khandelwal, secretary general of the confederation has demanded that the government explained its reasons.

The government owes an explanation to the people of this country. The variations are major departures and sharply highlight how the government is acting against the interest of its people to favour multinationals,” he said in a statement. 

CAIT has since called on the president, Pranab Mukherjee, to order an independent probe into what has happened over the last 10 months to move the government to implement changes.

Key details changed

The original policy mandated FDI retailers to procure 30% of their stock from small- and medium-sized indigenous suppliers, something Anand Sharma, the union commerce minister, has regularly repeated to the media, and an element that served largely to placate the anti-FDI body. 

However, [the updated policy] has added a clause that the 30% procurement will be calculated based on total procurement over the first five years by global retailers,” BC Bhartia, the national president of Cait, said.

This is a huge variation and leaves the policy without any teeth as it gives enormous room for non-conformity. How will any government keep track of this over five years and ensure that this is done?” Bhartia questioned.

Another of the business group’s challenges relates to the location of retail outlets. The initial policy would only allow foreign retailers to open stores in cities with populations of over a million. 

However, Crait claims that this has now been changed to say that, in states that do not have cities of this size, multinationals can instead open outlets wherever they choose. “This makes a mockery of parliament and exposes the falsehood of the government” said Khandelwal.

Cait has announced that it plans to write to all political parties to raise the issue of breach of privilege during the forthcoming winter session of parliament. The body alleges that these variations will make it easier for global retailers to grow in India without unchecked, while at the same time shutting out indigenous chains. 

The policy is hugely detrimental to the interest of not only the small industries but will have an adverse impact on farmers, traders, hawkers and labours,” added Bhartia.

The government has yet to publicly comment on any of Cait’s claims.

Burning effigies across India

Meanwhile, in another development designed to highlight the opposition of many sections of the trading community towards the government’s FDI policy, members of various trade associations gathered in over 100 locations across the country to burn effigies of the Hindu demon, Ravan.

Taking place on the eve of the Dussehra religious holiday, organisers accused FDI of being a “real demon that will enable global retailers to eat into the Indian retail trade by controlling and dominating it with their vast resources and enormous power,” according to an announcement.

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