"This is one of the most open decisions with the most enormous amounts of consultation. It almost has been going for a year. I do not think anyone was in any doubt that this was happening and it is coming to the Cabinet and the Cabinet will decide," he said in an interview to Karan Thapar for the programme 'India Tonight' on CNBC TV-18.
Responding to the criticism that UPA allies were not taken on board, Ahluwalia said, "...this is not a case that allies were not aware of. In some cases, actual consultation took place."
On objections being raised by states on allowing FDI in retail, he said, "It gives them a veto. We should not let any one state veto the developments for the country on a whole. There are states that are keen to do it. The Chief Minister of Punjab said that this would be very good for farmers. There are many others those who have the same view."
Given the response the decision has evoked from states, he said multinational companies would be able to set up stores in about 20 cities.
"The calibration is whichever state wants to do it, can do it. The total number of cities is a little over 50 (with over 1 million populations), and half of the states have sort of said no, which has reduced the number to 20," he said.
He said the Prime Minister has already explained that "if states have reservations, FDI in retail cannot be implemented unless states give the relevant local positions".
As regards reservation of 30 percent on sourcing of goods by companies, Ahluwalia said, "The SME reservation was always meant to be India specific...sometimes documents may misrepresent something, but nobody in the world would want that we impose an SSI reservation in favour of SSIs in other countries. If there is some document that said that, I am sure it was unintentional."
On questions concerning job loss on account of opening of retail, Ahluwalia said, "I do not believe that employment is the reason to do this. Although it is clear that if we get some improvement in the value trade, it will generate more employment."
Moreover, he added, FDI in retail will increase upstream and downstream activity which in turn will generate employment, besides eliminating middlemen.
The main case for mordernizing trade, he said, "is that it will tackle the present inefficiencies in the distribution system where farmers get a fraction of what consumers pay".
"It will reduce prices for consumers while farmers will get much more than what they get now. These are the two groups we should focus on. FDI in retail will help the process of modernization of retail," he added.