Supreme Court calls FDI in multi-brand retail a boon
The Supreme Court has maintained the central government’s proposal to allow Foreign Direct Investment (FDI) in Multi-Brand Retail Trade (MBRT) saying the move did not suffer from any unconstitutionality, illegality, arbitrariness or irrationality.
The called the Centre’s move to allow 51% FDI in retail is legally valid as per Foreign Exchange Management Act 2000 (FEMA). The court backed the step saying it will enlarge the choice of purchase at more affordable prices and by eradicate the traditional trade intermediaries/middlemen to facilitate better access to the market [ultimate retailer] for the producer of goods.
The opposition in the court contended that the notification was issued without any source of law and parliamentary approval.
What is FDI in multi brand retail?
The centre wants to enhance the share of FDI in organized multi-brand retail by increasing the foreign investment limit to 51%. It would mean that foreigners would be able to own up to 51% of supermarkets. According to Centre, the move would benefit would be one of the most effective ways to help the country deal with food inflation, which stands close to 10%. It would also remove the middle-men or intermediaries by facilitating actual producer of goods (majorly farmers) to get better access to the market. It would expand the organized retail sector which currently account for about 6% of India’s $470-billion retail market. As seen by the government, it would give fillip to implement economic reform agenda seen as crucial to revitalizing growth and slashing a swollen fiscal deficit. Currently, multi-brand retail in India is largely an unorganized sector dominated by neighborhood kirana stores.
Why there is opposition by other political parties?
Other political parties like BJP, SP, BSP etc. are against this move as they see it counter-productive to Indian retailers and farmers as they could be affected by the entry of global retailers.