Nirmala Sitharaman rules out FDI in multi-brand retail; open to foreign investment in other sectors.

NEW DELHI: The new BJP government will soon spell out clearly its position on foreign direct investment (FDI) in multibrand retail even as it formulates the contours of the FDI policy on defence, railways and construction.

The government is also looking at making it easier for companies to do business rather than be bogged down by various requirements, such as those stipulated in the new Companies Act, minister for commerce and industry Nirmala Sitharaman told ET in an interview. The state of the economy requires mending and the budget to be announced on July 10 will attempt to give out the right signals, particularly to revive manufacturing, she said.

Sitharaman, who has independent charge of commerce and industry, said FDI in retail will not be allowed.

"We are absolutely clear that we do not want FDI in multi-brand retail... We have to see how best to execute it and will work on the nitty-gritties and come up with a way out in the coming few days," she said.

The United Progressive Alliance government had opened the multi-brand retail sector to FDI but the Bharatiya Janata Party is strongly opposed to it. "Barring the multi-brand retail sector, FDI will be allowed in sectors wherever needed for job and asset creation," BJP said in its manifesto.

Sitharaman said the decision was imposed on the people of the country and the government will stick to the election promise. "There is no question of us talking about FDI in multi-brand retail trading," she said. British retailer Tesco recently invested $110 million in partnership with the Tata Group's Trent to open front-end stores in Maharashtra and Karnataka.

"There are people in the sector self-employed for generations. What authority do we have to take their jobs? Even when the executive order was passed by the previous government, we had very clearly said opinion is divided. This came through even as the Parliament session was on, almost through the backdoor... pushed on the people of India," she said.

However, Sitharaman, who is also minister of state for finance and corporate affairs, made it clear that the new government was open to allowing FDI in other sectors on which comprehensive discussions were being held.

"Some sectors need money, some technology, some both, etc. So, on FDI we want to have a complete and thorough discussion. We have started talking about defence, construction, railways," she said.

On increasing the FDI cap in insurance to 49%, Sitharaman said, "Discussions are on more from the point of view of 'can you do it'? If yes, then by how much and then take it to Parliament." Sitharaman said that the gov-ernment was looking at action and reforms beyond the Union budget.

"Different ministries are engaging with various stakeholders to address concerns at different levels. All the action points required are being compiled. Budget gives the direction and resource allocation, but we are looking at 360 degrees to address issues ailing various industries and sectors... Budget will be a statement of where our conviction lies and in which direction we want to move," she said, without giving details.

As manufacturing contracted 0.7% in 2013-14, she said the government is working towards simplification of regulations and compliance norms for companies, which will ease doing business and improve investor sentiment.

The new government has started reviewing the Companies Act, 2013 to make it simpler for business. "Are you going to make manufacturers concentrate on the core activity or make them spend more time complying and reporting, changing auditors, etc. We are looking at the Companies Act... How we can we review it, simplify it, does it require amendment to that effect or just change the rules and regulations. Work on that has already started," she said.

On the free trade pacts, the minister noted that the agreements already signed are being reviewed to be better prepared to negotiate new ones and not to renegotiate the existing ones.

Sitharaman said the new Land Acquisition Act, which has affected projects across the country, was being discussed to be suitably amended.

The social impact assessment should not be required for government for public private partnership projects, she said.

"If you look at it conservatively, social impact assessment is going to take three to five years by the time the term of one government is over. In five years, how much can you do if you are waiting for a small feasibility study to come," said the minister.

The new Act, which requires the consent of 70% of land owners for PPP projects and higher compensation, has stalled various highway projects and raised the cost for industrial corridors.

Source : economictimes.indiatimes.com