Posted at 05:45 AM ET, 12/07/2011

India shuts door to Wal-Mart, for now

NEW DELHI — India’s government bowed to 12 days of bitter opposition in Parliament and put on hold on Wednesday a hot-button policy that would have opened the doors to foreign supermarket chains like Wal-Mart and Britain’s Tesco to set up businesses here. The move is another political blow to the beleaguered government, battling with allegations of corruption and policy paralysis in the past year.

A woman shops at a local grocery store in Bangalore, India, in November. Mom-and-pop stores like this fear the arrival of big foreign chains such as Wal-Mart. (Aijaz Rahi - AP)
Finance Minister Pranab Mukherjee said in a one-line written statement that the decision to allow foreign investment in large supermarket retail stores is “suspended till a consensus is developed through consultation among the various stakeholders.” The statement came after his meeting with representatives of all political parties, which was called to break the face-off in Parliament and coax the opposition into cooperating with the government in the chamber.

The decision to open up India’s $450 billion retail market to foreign companies has been bitterly debated for over a decade.

When Prime Minister Manmohan Singh’s coalition government announced the major policy decision last month, it was hailed by analysts as the first bold economic move since his second term began in 2009. But not only opposition parties, even his own colleagues in the government and the Congress party disagreed. Thousands of small shop-owners across India protested on the streets saying that big retail stores like Wal-Mart will wipe out their livelihoods.

“In a democracy, the government has to listen to the voices of the people. It cannot bring in foreign companies and ignore the demands of Indian people,”said Praveen Khandelwal, secretary general of Confederation of All India Traders.

By  |  05:45 AM ET, 12/07/2011

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