India does U-turn on foreign retailers
Source: Agencies |
December 8, 2011, Thursday
|
Print Edition
Print Edition
INDIA yesterday suspended its plan to open its huge retail sector to foreign companies such as Wal-Mart in a reversal seen as a major capitulation to political opponents that further weakens the administration.
The business community had hailed the initial decision to let foreign firms own a majority stake in local retailers just two weeks ago, and the government and some economists said foreign retailers would bring better prices for farmers and lower prices for consumers.
But opposition parties and even some members of the governing coalition protested, saying the local mom-and-pop stores that are the heart of Indian retailing would be crushed. Opposition lawmakers disrupted Parliament for days in protest.
Yesterday, the government met with all the parties in Parliament to hammer out a deal: It would suspend the decision if they would let the legislature function.
Afterward, Finance Minister Pranab Mukherjee told Parliament that the foreign retail plan was "suspended until a consensus is developed through consultations with various stakeholders."
It was not clear how long that process would take or whether the policy would be implemented or canceled.
Sushma Swaraj, an opposition parliamentarian, welcomed the government's move. "To bow before the people's feeling does not weaken the government, but strengthen the democracy," she told Parliament.
Other opponents claimed victory.
"It is a virtual rollback," said Gurudas Dasgupta, a Communist Party lawmaker.
"This is a signal that this government can't do anything with force," said Ashok Gulati, chairman of the Commission for Agricultural Costs and Prices in the Ministry of Agriculture. "It's the nation that loses."
The Cabinet announced on November 24 it would allow foreign companies to own 51 percent of supermarket chains, but only in major cities. It also announced it would allow foreigners to own 100 percent of single-brand stores, such as IKEA; the fate of that plan was not announced yesterday.
The move signaled to business leaders that India was serious about economic reforms and welcomed foreign investment. Wal-Mart, Tesco Plc, Carrefour and others had been eying India.
The business community had hailed the initial decision to let foreign firms own a majority stake in local retailers just two weeks ago, and the government and some economists said foreign retailers would bring better prices for farmers and lower prices for consumers.
But opposition parties and even some members of the governing coalition protested, saying the local mom-and-pop stores that are the heart of Indian retailing would be crushed. Opposition lawmakers disrupted Parliament for days in protest.
Yesterday, the government met with all the parties in Parliament to hammer out a deal: It would suspend the decision if they would let the legislature function.
Afterward, Finance Minister Pranab Mukherjee told Parliament that the foreign retail plan was "suspended until a consensus is developed through consultations with various stakeholders."
It was not clear how long that process would take or whether the policy would be implemented or canceled.
Sushma Swaraj, an opposition parliamentarian, welcomed the government's move. "To bow before the people's feeling does not weaken the government, but strengthen the democracy," she told Parliament.
Other opponents claimed victory.
"It is a virtual rollback," said Gurudas Dasgupta, a Communist Party lawmaker.
"This is a signal that this government can't do anything with force," said Ashok Gulati, chairman of the Commission for Agricultural Costs and Prices in the Ministry of Agriculture. "It's the nation that loses."
The Cabinet announced on November 24 it would allow foreign companies to own 51 percent of supermarket chains, but only in major cities. It also announced it would allow foreigners to own 100 percent of single-brand stores, such as IKEA; the fate of that plan was not announced yesterday.
The move signaled to business leaders that India was serious about economic reforms and welcomed foreign investment. Wal-Mart, Tesco Plc, Carrefour and others had been eying India.
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