Is FDI in retail a "political gimmick"?, the Supreme Court today asked the Government while seeking its response on how it intends to safeguard the interest of small traders after opening up the retail sector to foreign direct investments (FDI).

The apex court said that interest of small traders should not be affected by FDI in retail sector.

The apex court said that there is apprehension in the mind of small traders that their business would be affected with the coming of multinational companies in retail sector which needs to be allayed by the government by putting some regulatory mechanism.

A bench headed by Justice R M Lodha and S J Mukhopadhaya asked the Centre to file its response on these aspects within three weeks and also queried whether some foreign investment has come in the country after opening of retail sector or it was just a "political gimmick".

"What checks are there to ensure that free trade is not affected, particularly the interest of small traders," the bench said while hearing a public interest litigation (PIL) filed by an advocate questioning Centre's policy of opening retail sector for foreign direct investment.

"Apprehension is there in the mind of people that small traders' interest would be affected. How do you intend to allay the fear. Some regulatory mechanism has to be there," the bench said.

Favouring regulatory framework to protect small traders, the bench said that the big companies can bring price of commodity down through unfair trade practises forcing small traders to shut their shops and the companies thereafter can increase the price and monopolise the market.

"Has the policy brought some investment in the country or is it just a political gimmick. Has the policy brought some fruits?," the bench asked the government.

Expressing reservation on scrutiny of the policy by the court, Attorney General G E Vahanvati said that it is a policy matter which has been approved by Parliament and all these aspects were discussed by MPs.

The bench, however, said Government policies are not sacrosanct and the court has right to see that the policy is reasonable and within Constitutional framework.

"Any policy is not sacrosanct and it must be within the constitutional parameters. We are not policy makers and we can not substitute government policy but we will see that it is reasonable and within the constitutional framework," the bench said.

The court adjourned the matter for five weeks.

The Confederation of All India Traders welcomed the court's observation on protecting the interests of small traders.

"The issues raised by court for the protection of small traders is a welcome step. We have always advocated that Centre must put in place mechanism or regulatory framework to protect the interest of small traders who are very apprehensive about the FDI policy in retail," general Secretary of Praveen Khandelwal said.