BJP spokesperson Mr. Prakash Jawadekar rubbished the government’s claim that Foreign Direct Investment (FDI) in retail cannot be introduced in states that do not want it. By asserting this the UPA was reinforcing arguments favouring federalism. The BJP pointed out that any foreign firm could successfully challenge the state’s decision in a court of law. The World Trade Organization treaty compelled its members to allow foreign companies all rights granted by national policy. The BJP therefore was not quite correct. If a state government disallowed domestic retail giants to operate within its state it could equally disallow foreign retail companies. Appreciating this perhaps led UP Chief Minister Mr. Akhilesh Singh Yadav to question the desirability of even domestic giants participating in retail trade. 

Now the Trinamul Congress (TMC) is reportedly moving one step forward. According to media reports the West Bengal Industries Minister Mr. Partha Chatterjee plans to table a resolution in the assembly opposing entry of both domestic capital and FDI in retail. If the motion is passed and leads to legislation, existing retail giants like Reliance, Big Bazar, Pantaloons and others would suffer along with Kolkata’s public.

More importantly, by isolating itself from all capital investment in retail the TMC would demonstrably enable other states to allow both domestic as well as FDI in retail. The principle of parity for domestic and foreign capital would have been highlighted. 

Mr. Chattterjee’s move may therefore impede the UPA reform process in West Bengal but promote it in other states. In that event if the policy is implemented before the election the public would be in a position to judge the merits of FDI in retail by comparing the conditions prevalent in different states.

Will that help or harm the prospects of the UPA government?
One wonders if TMC leaders have done their homework.