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