Aam Aadmi Party pulls the plug on FDI in retail stores in Delhi

Arvind Kejriwal has come good on another pre-election promise. His government in Delhi has withdrawn permission for multi-brand retail stores that would be owned by large international super-chains.

In his campaign ahead of the recent elections, Mr Kejriwal had said that his Aam Aadmi Party (AAP) does not agree with the Centre's decision to allow Foreign Direct Investment (FDI) in the vast retail sector, enabling foreign firms to buy majority stake in in Indian firms and sell directly to customers.

The Chief Minister said today he was not opposed to FDI, but it had to be decided on a sector to sector basis.

"FDI provides a wise range of choice to consumers but it has been seen in several countries that it has let to unemployment. There is a huge unemployment problem in Delhi, we don't want to increase it further," he explained, adding that he would soon meet with industrialists to discuss further changes needed in policy.

In 2012, Dr Manmohan Singh decided, despite opposition from some of his allies, to allow FDI in retail. Mamata Banerjee and her party, the Trinamool Congress, exited his coalition, reducing his government to a minority.

Critics say allowing foreign players into the $450 billion retail sector will destroy the livelihoods of millions of small store owners. The union government says the move will bring down waste and costs in a country where one-third of fresh produce rots and food inflation is a persistent worry.

The Centre stressed that it is up to state governments to decide whether to implement the economic reform.

The Congress government in Delhi, which was headed by Mr Kejriwal's predecessor Sheila Dikshit, had allowed the policy.

Mr Kejriwal has written to the Ministry of Commerce and Industry, saying that his government, which was sworn in last month, does not support the liberalization of the retail sector for the capital.