FDI in retail: FISME stance leads to policy tweak

While the government has finally been forced to put on hold its policy to allow 51% foreign direct investment (FDI) in multi-brand retail, it was not before there were some significant developments reflecting the importance of FISME, India’s largest organisation of micro, small and medium enterprises, in India’s policy-making framework. The stance taken by FISME President Mr. V.K. Agarwal led to a media clamour and a change in the government's position. Initially, the government had announced that foreign retailers would be required to source at least 30% of their annual purchase from MSMEs but this “can be done from anywhere in the world and is not India specific.”  Shortly after this announcement, FISME President Mr V.K Agarwal gave his reactions to the media pointing out that this clause would help Chinese rather than Indian MSMEs as Chinese labour was cheaper. He said “Chinese products are a nuisance for us. And, after this (the FDI policy) it will become more difficult for us.” His statement was picked up by the media in a big way leading to a major hue and cry over how the policy was slanted against Indian MSMEs. This led the Union commerce and industry minister Anand Sharma to call a press conference the very next day and clarify that the condition is applicable only for Indian MSMEs and the earlier version was “misconstrued”. FISME, is, however, of the view that the matter needs to be studied in greater detail and an appropriate policy response should be taken only after due consultation with stakeholders.  Read media reports on the issue:

Outlook India (Nov 27, 2011)

 

Outlook India (Nov 28, 2011)

 

The Hindu Business Line

indu B

 

Money Control

 

Manorama Online

 

The Deccan Herald

 

The Hindustan Times

 

Zee News

 

The Financial Express

 

The Hindu

 

First Post

 

The Economic Times (Nov 30, 2011)

 

The Economic Times (Dec 8, 2011)

 

Live Mint

 

Indian Express