INDIA HAS opened up its $450 billion (€340 billion) retail industry to overseas investors amidst opposition concerns over mass unemployment following the near certain entry of firms like Walmart, Tesco and Carrefour into the world’s largest untapped market.
Prime minister Manmohan Singh’s government approved 51 per cent foreign direct investment in supermarkets last Thursday in a move aimed at improving decrepit infrastructure leading to widespread food wastage, alleviating malnutrition and reducing galloping inflation.
But the sudden move, resisted fiercely not only by opposition parties, millions of small shopowners who fear for their livelihoods and even by some federal government coalition partners, prompted an uproar in parliament yesterday forcing it to adjourn until Monday.
However to appease criticism, the government imposed provisos under which foreign retailers would need to source a third of their produce from small industries and invest a minimum of $100 million in India, spending half that amount to build infrastructure. Besides, foreign stores would only be permitted in cities with populations of over 1 million with individual provincial administrations deciding their entry into their respective regions.
Financial analysts said these restrictions could hamper global companies wanting to set up shop in the world’s second-most populous country after China with an economically resurgent middle class population of over 300 million.
“We will need to study the conditions and the finer details of this policy and the impact it will have on our ability to do business in India,” Raj Jain head of Walmart’s local cash-and-carry joint venture said.
Government MPs too were optimistic that the proposed investments would breathe new life into Singh’s moribund government beleaguered by corruption scandals and vacillation.