Large retail chains have been thrown a lifeline by the Centre. Concerned by the sudden decision by Uttar Pradesh and Kerala to order corporate retail chains to close their outlets, the Centre has asked these states to explain why the stores have been shut.
In the case of UP, the department of consumer affairs has sought the intelligence reports cited by state chief minister Mayawati while ordering the stores? closure. The department feels the exercise has harmed the ?consumers? interest?.
Government officials told FE that the Centre was concerned about the fallout of the closure of some retail chains like Reliance, Spencer?s and Subhiksha. ?Preventing organised retail could lead to cartelisation by small retailers. This would impact the organic growth of the retail sector to develop a pan-India reach, which, in turn, would hurt the consumers? interest,? one official said.
?Apprehending law & order problems is no reason for asking national retail chains to stop their operations,? an official said. The Centre has similarly asked the Kerala government why it had banned the operations of national retail players.
Meanwhile, Reliance Retail has decided to go slow on its plans in Kerala, UP and West Bengal, which have been identified as troubled spots. The company will take a further decision once clarity emerges on the issue.
Senior counsel Mukul Rohtagi said the UP government?s move was constitutionally invalid and could set a bad precedent. ?Article 19 of the Constitution gives one the right to carry on a legal business.?