India Yields to Protests, Suspends Move To Permit 51% Foreign Stake in Multi-Brand Retail
By Amrit Dhillon
NEW DELHI—The Indian government has suspended its Nov. 24 decision to allow 51 percent direct foreign investment in multi-brand retail—a measure that was meant to showcase the government’s determination to push through reforms but has now achieved the opposite effect.
After a fortnight of vehement protests from the opposition, allies in the ruling coalition and even from some members of the ruling Congress Party who claimed that millions of small, family-run stores would be thrown out of business, the finance minister announced Dec. 7 that the government would seek to build a consensus on the issue before implementing the decision.
Global retailers such as Walmart, Tesco and Carrefour had been hoping to enter the country’s $450 billion retail sector, currently dominated by mom-and-pop stores (228 WTO, 11/28/11).
Failure to ‘Sell’ Benefits
“The way the government announced it was ridiculous. It didn’t sell the policy, it didn’t project what its benefits would be for farmers and consumers and it got the timing disastrously wrong—when Parliament was in session and the opposition were looking for another stick to beat them with,” said New Delhi political commentator Satish Jacob.
The announcement disrupted Parliament. Days were lost with no business transacted. Finally, the government, anxious to restart a paralyzed Parliament with many important bills to pass, backed down…