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India Cabinet To Discuss Loosening $450bn Retail Sector
BBC NEWS, INDIA
November 24, 2011: the Indian cabinet is set to discuss long-awaited proposals to open up the $450bn a year retail sector to global supermarket chains. Thursday's meeting will discuss whether to allow 51% foreign direct investment in multi-brand retail, allowing groups like Wal-Mart and Tesco to open stores. Such operators can only sell wholesale in India and not directly to customers.
Correspondents say the issue is complex and controversial and a clear-cut decision is by no means guaranteed. A decision on the issue has been pending for two years.
'Completely opposed'
Supporters of the move say it will increase competition and quality while reducing prices, which have been hit by close to double-digit inflation. Opponents say the multi-nationals will squeeze out India's smaller and poorer traders and drive down prices paid to India's farmers.
One cabinet ally of the ruling Congress party, Dinesh Trivedi of the Trinamool Congress, said his party was "completely opposed to it". He said: "My suggestion in the cabinet meeting will be that an all-party meeting should be called to discuss this sensitive matter before taking it up in the cabinet."
The main opposition Bharatiya Janata Party is opposed to the proposal and there have been street protests by traders. BJP politician Murli Manohar Joshi said the move was "a tool to kill the domestic retail industry".
But Gibson Vedamani, a board member of the Retailers Association of India, told Agence France-Presse: "If this proposal gets through, consumers will have many more choices - it will truly be a borderless world in terms of products available."
Trade Minister Anand Sharma said there was "a broad-based consensus" in the cabinet in favor of the proposal.
However, some analysts have pointed to the potential political fallout and say there may be another move to postpone any decision.
The multi-nationals have long been eyeing the lucrative Indian market. Only single brand retailers can have 51% foreign direct investment (FDI), although 100% FDI is allowed in wholesale.
Any easing could come with strict controls, for example on local sourcing and levels of investment.
