India in 'U' turn rejects Wal-Mart opening
NEW DELHI, (AFP) - India suspended plans to open its $470 billion
retail sector to foreign supermarkets such as Wal-Mart, in a major U
turn forced by an outcry from small shopkeepers and opposition MPs.
The climbdown was a grave embarrassment for Prime Minister Manmohan
Singh's government, which had announced the retail reform with great
fanfare just two weeks ago.
The arrival of international chains such as Wal-Mart, Carrefour and
Tesco in India was expected to herald a consumer revolution with
shoppers moving from small, neighbourhood stores to large, out-of-town
supermarkets. But anger over the planned reforms united "mom and pop"
store owners, trade unions, influential state leaders and opposition law
makers who have paralysed Parliament over the issue.
"The decision to permit 51 percent (foreign direct investment) in
multi-brand retail will be suspended till a consensus is developed
through consultations," Finance Minister Pranab Mukherjee told
The Federation of Indian Chambers of Commerce and Industry (FICCI),
the country's leading business body, described the government's reversal
as "deeply disappointing".
"It is a highly regressive move," it said in a statement. "For the
economy as a whole it is imperative that the reforms like these should
Observers added that the capitulation would fuel criticism of in
decision and policy drift within Singh's administration amid worsening
economic data and a series of corruption scandals. "This is a huge
setback and will not go down well with foreign investors," said P. Phani
Sekhar, fund manager with Mumbai's Angel Broking.
Sushma Swaraj, parliamentary leader of the main opposition Bharatiya
Janata Party (BJP), which had spearheaded opposition to the reform,
mocked the Government benches as she welcomed Mukherjee's announcement.
"Bowing down to popular sentiment is not a defeat for the
government," Swaraj said. "That the government bowed down before popular
sentiment is a great victory for democracy."