Loading...
See More

India 'suspends' retail reform

Dec 04 2011 15:28 Sapa-AFP

Related Articles

India's quarterly growth slows

India approves FDI in supermarkets

Indian rupee sinks against dollar

Flying car maker eyes India, Brazil, China

Preparing for Walmart

India stuck in impasse over retail reform

 
New Delhi - India's government has "suspended" plans to open the nation's huge retail sector to global competition that have paralysed parliament, a key ally of the ruling coalition said on Saturday.

The move to allow foreign investment by Walmart and other supermarket giants in India's estimated $470bn retail industry was the first big reform to be announced since the government began its second term in 2009.

Finance minister Pranab Mukherjee "has informed me that the government is suspending the FDI (foreign direct investment retail) issue until a consensus is evolved", Mamata Banerjee, chief minister of West Bengal state, said in televised remarks.

She said people could "rest assured" that the decision to delay foreign investment was not "temporary".

Mukherjee confirmed that he had spoken to Banerjee but said he could not comment on her statement.

"Officially I cannot announce anything because parliament is in session. A government announcement will be made in parliament," he told reporters.

But a Congress party spokesperson said that the party welcomed "all meaningful efforts" to break the stalemate that has hamstrung parliament, threatening to derail the government's legislative plans for the session.

"In such a situation (as changes to the retail policy), a broad consensus is required," Congress general secretary Janardan Dwivedi told India's CNN-IBN network late on Saturday.

Indian television quoted government sources as saying Premier Manmohan Singh's government was not abandoning the retail policy changes announced late last month but would seek broad agreement before proceeding.

"Holding back does not mean rolling back," India's Business Standard newspaper quoted an unnamed cabinet minister on its web site as saying.

Anger over the reforms has united shopkeepers, trade unions, influential state leaders and lawmakers from opposition parties and from within Singh's own coalition.

Banerjee's regional Trinamool Party is the biggest partner of the Congress coalition and important to its survival in parliament.

The Trinamool Party had objected to the government allowing international supermarkets into India, saying the move would swamp small family-owned stores which dominate the retail landscape and throw millions out of work.

Any retreat on retail reform would be a major blow to Singh's administration, which has struggled for months against charges of policy paralysis amid worsening economic data, high inflation and corruption scandals.

"A rollback would be a very bad thing," Saloni Nangia, senior vice-president of retail at Technopak, a top Indian consultancy, told AFP before Banerjee's statement.

"It would send a bad signal to the international community about the potential for investment."

Foreign multinationals have lobbied for years to sell directly to Indians.

The main opposition Bharatiya Janata Party (BJP) - a staunch free enterprise advocate when in power - has been coordinating protests against with shopkeepers who staged a one-day nationwide strike last Thursday.

"Walmart may be fine (for the West) but Walmart does not serve us," veteran BJP leader L K Advani told the Hindustan Times Leadership Summit.

The BJP said it wanted a formal abandonment by the government of the cabinet decision to open up to retail to global supermarkets before it would let parliament function.

The government must not "fool the people that foreign direct investment in the retail sector is a panacea to solve all problems of poverty and unemployment", Advani said.

india
NEXT ON FIN24X

 

Lastest Articles

Here is how to check your credit score and manage it Read More...
Top tips to save money over the festive period Read More...
These are the top 5 most fuel efficient cars in SA Read More...
What to consider when switching medical aid schemes Read More...
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...