INDIAN REFORMS POSTPONED
08 Dec, 2011
Plans to reform the Indian retail market have been postponed by Parliament, after having caused controversy and chaos when announced last month.
The cabinet did announce its decision to open up the retail market to international supermarket brands such as Tesco and Wal-Mart, who, under current rules are only allowed to sell wholesale in India, and not retail – directly to customers. However, the plans unleashed chaos in parliament with people shouting and waving banners, resulting in the adjournment of the lower house.
Trade Minister, Anand Sharma, said in a subsequent press conference that the scheme would create ‘tens of millions’ of jobs.
However, this week, it has been reported that the Indian Finance Minister, Pranab Mukherjee, said that the decision has been ‘suspended until a consensus is developed through consultation among various stakeholders’, according to the Financial Times.
The planned rules would allow 51per cent foreign direct ownership (FDI) of multi-brand retail stores and advocates of the plan claim that it will boost quality and competition, whilst at the same time reduce prices, which have soared recently due to severe inflation rates. However, challengers to the move argue that the global brands will force out smaller Indian businesses and have a negative effect on prices being paid to native farmers.
The decision to suspend the plans have been met with disappointment from several parties, with the Federation of Indian Chambers of Commerce and Industry claiming it was ‘deeply disappointing’, while the opposition Bharatiya Janata party, was jubilant with member Sushma Swaraj stating that the decision was a ‘great victory for democracy’ due to the fact the government was influenced by public opinion, reported the FT.