India retail reforms on hold
08 December 2011
India has suspended plans to allow foreign firms such as Wal-Mart to invest in its $450bn supermarket sector, in the face of a huge political backlash in the country.
The retreat comes just two weeks after the policy was announced and at a time where the emerging market is suffering from a lack of investment and slow growth, behind its fellow BRIC markets Russia, China and Brazil.
The policy would have allowed foreign companies such as Wal-Mart, Tesco and Carrefour to own 51% in Indian supermarkets, in a bid to ease inflation and attract investment to improve the supply-chain infrastructure and create more jobs.
“The decision to permit 51% foreign domestic investment in multi-brand retail trade is suspended until a consensus is developed through consultations among various stakeholders,” said Finance Minister Pranab Mukherjee in a statement.
The government gave no indication of when the supermarket reform will be revived, but analysts have predicted that it could be kept on the back-burner beyond the general elections of 2014.
Jenni Baker, London