What Arvind Kejriwal's decision to withdraw retail FDI from Delhi means

Many have pronounced that Delhi Chief Minister Arvind Kejriwal's letter to the department of industrial policy directing that the permission given by the previous Congress government for foreign direct investment (FDI) in multi-brand retail be withdrawn, signals the death of the policy itself. But there is no reason to be surprised by the step. Did people seriously expect Kejriwal to confine his policies to water, electricity and vegetables? He was bound to move on to meatier issues , such as the $450 billion retail industry, the second largest employment generator in the country.



The retail industry employs around 35 million people, about 90 per cent of them in the unorganised sector controlled by local shopkeepers. The figure of 35 million is expected to rise by another 15 to 30 million in the next decade. And among the core constituents of Kejriwal's Aam Aadmi Party (AAP) are local traders, shopkeepers and small entrepreneurs, who were increasingly feeling that they were not being heard by the traditional political parties. Supporting AAP has been their last ditch attempt to find a voice in a system that is increasingly dominated by big industrial houses.

Kejriwal has clarified that he is not imposing a blanket ban on FDI in retail. In fact, he agrees that FDI in retail will provide greater choice to consumers. His concern is the likely large scale loss of jobs if international retailers are allowed to enter.

Nor are the big retail groups surprised. FDI in retail has been so controversial an idea in India from the start that the likes of Walmart, Tesco and other international retailers were all prepared for such flip-flops till the general elections are held in May and perhaps even afterwards. Most of them have not been keen to invest in India despite its large market. All of them were already unhappy about the mandatory local sourcing clause which put them at a disadvantage.

If it was Kejriwal's plan to make the corporate world sit up and take notice of his party and his government, he has certainly succeeded. Delhi, after all, is a retailers' paradise, the biggest and fattest consumer in the country.