The government today said that the recent decision to allow 51 per cent FDI in multi brand retail with conditions does not violate India's international commitments and agreements with any country. The

Commerce and Industry Ministry in its statement has said that the opening up of FDI in multi brand retail trading is a liberalisation measure and remains so with all the conditionalities, given the fact that currently FDI in multi brand retail trading is not allowed at all in India. The statement, however, reiterated that the recent policy decision did not infringe on any such agreements.

Citing the case of Bilateral Investment Protection Agreement (BIPA), it said that FDI approval does not fall under it as the agreement is a post-establishment investment, one implying equal treatment to domestic and foreign investors, unless the limitations to national treatment are clearly spelt out at the pre-establishment stage. The FDI policy is a pre-establishment instrument and therefore not covered by BIPA.

The Ministry further said, since FDI in multi-brand retail trading was not allowed when Comprehensive Economic Cooperation Agreement (CECA) and Comprehensive Economic Partnership Agreement (CEPA) were negotiated, none of these agreements are affected by the recently approved policy. It said that the policy of allowing FDI in multi brand retail also says that it would be the prerogative of the states to allow setting up of stores. The policy nowhere provides that it is applicable only to certain states. The policy itself is a national policy and can potentially be applicable to all the states that are desirous of implementing it.