BBC News: “India’s government has once again cleared a controversial plan to open up its lucrative retail sector to global supermarket chains.
Last year, the government suspended a similar plan after fierce opposition from its allies and political rivals.
International firms such as Walmart and Tesco will now be able to buy up to a 51% stake in multi-brand retailers.
Analysts say the government has reintroduced the measure in an effort to revive a flagging economy.
Prime Minister Manmohan Singh is reported to have told cabinet colleagues that “the time for big bang reform has come; we have to go down fighting”.
Strong opposition
The decision was one of several key reforms announced by the government. It also approved a plan to allow foreign airlines to buy 49% stakes in local carriers, in the hope that this will boost the country’s troubled aviation sector.
The decision to open up India’s lucrative retail sector to international supermarket chains has come as a major surprise. It was among a slew of key economic reforms announced by the government and is seen as vital to reviving the country’s slowing economy.
For months the decision has been held up by political gridlock, especially because it was opposed by the government’s own allies. But it now appears the government has decided to bite the bullet, especially as its own credibility – and that of Manmohan Singh – is at an all-time low following a series of financial scandals.
Much will now depend on Mr Singh’s ability to keep his disparate coalition together, as opposition to these measures is expected to be fierce.
Many will see this as a final throw of the dice, not just to revive the economy and boost confidence among investors but also ahead of the national elections due in 2014.
It also follows Thursday’s dramatic 14% rise in the price of diesel, which is heavily subsidised in India.
The government was forced to back down on retail reform after the cabinet first undertook to open up the retail sector last November.
The move had been strongly opposed by tens of thousands of small businesses and cornershops who fear they will be put out of business.
But this latest move has already been welcomed by economists who say it will transform the way Indians shop and will boost the economy.
The opposition Bharatiya Janata Party and the Communists labelled it a “betrayal of democracy”.
via BBC News – India opens retail to global supermarkets.
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- With Wal-Mart Locked Out, India’s Billionaires Rush In – Bloomberg (bloomberg.com)
- We are not against FDI in multi-brand retail: Akhilesh Yadav (profit.ndtv.com)
- Singh Push to Revive Wal-Mart Entry Plan Hit by Fresh Opposition – Bloomberg (bloomberg.com)
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