Endless FDI concessions

THERE is more optics than substance in the government’s tweaking of the foreign investment policies. But, it is not without any purpose. It is reported that PM Modi will be attending the World Economic Forum in Switzerland later this month; the annual congregation is expected to draw in more than five dozen heads of state, hundreds of corporate honchos and leaders from civil society, academia and the media. Hence, it is necessary to showcase the current dispensation’s commitment to a liberal foreign investment regime.

 The other purpose of the announcements is quite obvious. The government wants to sugarcoat the proposed Air India deal for potential domestic bidders by giving them prior assurance that they could acquire a minority stake — up to 49 per cent — in the airline to a foreign carrier. It is a good strategy as the government’s family jewel is saddled by a Rs 50,000 crore debt. But before the sale, people responsible for Air India’s pitiable condition must be held accountable. It is common knowledge that many private airlines flourished at its cost under the tutelage of civil aviation ministers themselves.     

 The sharp public reaction against FDI in retail is, however, misplaced. 100 per cent FDI in single-brand retail, with 49 per cent through automatic route, is already allowed. What the government has done is to simply dispense with time-consuming government approvals and eased local sourcing conditions. This should bring joy to global players like Ikea, H&M and Apple to either set up or expand their own stores in India. This concession has little or no potency to upset domestic multi-brand kirana stores, certainly nothing compared to the trauma inflicted by demonetisation and the ill-conceived GST on thousands of neighourhood shopkeepers and small retailers. Stung by the double-whammy, businessman Prakash Pandey committed suicide last week after reportedly consuming poison at the BJP’s Janata Durbar. The government must take necessary policy steps to rehabilitate such victims and boost the sagging exports, instead of encouraging mindless imports of goods of conspicuous consumption. If India’s internal economy is strong, foreign investments will pour in without offering concessions.