The government stated that the policy of allowing foreign investment in India’s retail sector remains unchanged though the ruling party is politically opposed to it.
“The government has spoken through the notification,” finance minister Arun Jaitley said referring to the consolidated FDI circular for 2015 that was issued the by Department of Industrial Policy and Promotion (DIPP) on Tuesday. The fresh notification did not make any changes in the policy of allowing foreigners to pick up 51 per cent stake in multi-brand retail operations in India that was formulated during the tenure of the previous UPA government. “As far as (multi-brand) retail is concerned, the old policy is there. Our political stand was very clear. We were not in favour of that. However, DIPP has maintained the old policy which is clear in the circular,” he added.
He, however, ducked a question on whether the government will permit foreign retail chains like Wal-Mart to acquire stake in multi-brand retail companies.
Harish Bijoor, CEO?of Harish Bijoor Consults, said, “Retailers were obviously expecting government would allow 100 per cent in multi-brand retail which would have allowed the cash-strapped sector some respite.”
Jaitley said foreign direct investment in the previous fiscal grew 40 per cent on year to Rs 1.76 lakh crore. Addressing a press conference, the finance minister said resistance from the Congress party did not let the government pass the Constitution Amendment Bill for rolling out goods and services tax (GST) in Rajya Sabha even though there was a large consensus on it.
He said the main opposition disrupted the Upper House on a trivial issue to stall the passage of the bill. The house was not allowed to function to prevent voting on the bill and counting of votes is essential for a bill that seeks to amend the constitution to determine if it has got the required support of two-third members.
Jaitley, however, said that he is very hopeful that the government will be able to meet the April 2016 deadline for GST though challenges remain as states have to ratify constitutional amendment and supporting legislation have to be put in place. “The revenue department will be working with the empowered committee overtime to achieve the deadline,” he said.
Jaitley said that the rules for implementing the bill passed by Parliament to deal with undeclared assets held by Indian abroad will be notified in next two to three weeks. The rules will have details on the compliance window that will be offered to those willing to declare hidden foreign assets and pay tax and penalty on them, revenue secretary Shaktikanta Das said. Jaitley said K V Kamath will be taking over as president of $100 billion New Development Bank that will fund infrastructure projects and has been promoted by Brazil, Russia, India, China and South Africa in a week or 10 days.
He said that the bank would be operational next year after ratification comes from all the member countries.
Brazil is yet to ratify the proposal for creation of the bank as legislative process there takes a longer time, finance secretary Rajiv Mehrishi said. He added ratification from Brazil will come by the end of this year.
Jaitley said the challenge in the coming months before the government will be roll out spending on infrastructure as has been decided in the budget, specially in rural infrastructure and irrigation.
