Despite opposition from both within and outside the UPA, the government Thursday approved a proposal to allow 51 per cent foreign direct investment in multi-brand retail, and decided to scrap the 51 per cent cap in single-brand retail, where 100 per cent FDI will be permitted.
This was decided after a marathon meeting of the Union Cabinet which lasted over two hours. PM Manmohan Singh played the role of a moderator, sources said, as some ministers, including Trinamul Congress’ Dinesh Trivedi, voiced conflicting views.
Besides the railway minister, defence minister A.K. Antony too expressed reservations about opening the retail sector. But he could not press this as the Congress had already taken an “in-principle” decision on the matter.
“It has been decided to open the multi-brand sector for FDI provided the government formulates the policy keeping in view the interests of farmers,” the sources said.
Mr Trivedi reiterated his party’s opposition, and “argued that the issue needs more deliberation.” But commerce and industry minister Anand Sharma said he had already discussed it with Mr Trivedi’s party chief Mamata Banerjee.
Sources said finance minister Pranab Mukherjee supported the move, saying it would strengthen rural infrastructure by redefining supply chain and thus aid farmers.
With this, moreover, the government has signalled its intention of going ahead with its long-pending reforms agenda.