Multi-brand retail: Piyush Goyal warns consultants not to mislead investors

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New Delhi | Published: June 22, 2019 3:00:22 AM

Commerce and industry minister Piyush Goyal on Friday warned industry against violating the spirit of the law and asked lawyers and consultants, including of the big four firms, not to mislead investors into circumventing rules.

Don’t seek comma, full-stops in a law to enable your clients to bypass it

Commerce and industry minister Piyush Goyal on Friday warned industry against violating the spirit of the law and asked lawyers and consultants, including of the big four firms, not to mislead investors into circumventing rules.

Speaking at an event of industry body CII, Goyal said: “I would urge you all. If there are any lawyers in the room, please pardon me and if there are those Big Four in the room, double pardon me, but please stop giving advise which is not in the spirit of the law that is prevalent in India.” The big four firms referred to here are PwC, Deloitte, KPMG and E&Y.

“Please do not try to misguide any investor into finding those elements” from which a company can circumvent norms, he added. The minister advised consultants against finding some commas and full-stops in a law with an aim to enable their clients to bypass it, as “that is not possible and that cannot even be possible for us to overlook”.

Giving an example of foreign direct investment (FDI) limit in multi-brand retail, Goyal said companies must not try to circumvent the law by finding loopholes. He advised consultants against finding some commas and full-stops in the wording of a law with an aim to enable their clients to bypass it, as “that is not possible and that cannot even be possible for us to overlook”.

“We have a policy that in multi-brand retail, only 51% is allowed when it comes to FDI. We stand by that and we are firm on that and I would urge everybody to follow that, to respect that. The moment you recognise that reality and make your business accordingly, there will be no problem,” he said.

The minister’s statement assumes significance, as brick-and-mortar stores have for long accused e-tailers like Amazon and Flipkart for violating the FDI rules through predatory discounts, even though the FDI policies on e-commerce strictly bar online market places from offering discounts themselves. E-tailers are also barred from owning inventory of products sold on their platforms (except for the retailing of locally-produced food items). For their part, the e-tailers claim that they have always complied with the rules.

“Go by the spirit of the law. Spirit of the law takes round-tripping very seriously and if any of you have done that, better to acknowledge that and come clean and close the chapter, rather than struggling to evade the law of the land,” the minister said.

“I can assure you that nobody at all who has not done any wrong will have any problem. But at the same time, those who have indulged in any wrong-doing, I can equally assure you that there will be the strictest of action,” the minister warned.

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