INDIA: New Delhi confirms suspension of retail reform
Finance minister Pranab Mukherjee, announcing the suspension of FDI reforms
India's ruling Congress Party has today (7 December) confirmed that plans to allow more foreign investment in the country's retail sector have been suspended.
Speaking in the Indian parliament, Finance Minister Pranab Mukherjee gave official confirmation that the reforms, which have led to fierce opposition among parts of India's political elite, were not going to be forced through.
He said: "The decision to permit 51% FDI in retail trade is suspended until a consensus is developed through consultation among various stakeholders."
It emerged over the weekend that the Indian government was planning to put its reforms, announced two weeks ago, on hold.
On Saturday (3 December), Mamata Banerjee, chief minister of the state of West Bengal and leader of the All India Trinamool Congress party, the second-largest party in India's ruling coalition, said the government had suspended a decision on the reforms "until and unless there is a consensus of all parties on the matter". Today, however, was the first official confirmation that the reforms were being suspended.
Mukherjee said the Indian government would now consult all stakeholders, including the chief ministers of all states and political parties, before going ahead with the policy.
Under the plans, announced 24 November, foreign companies would be able to own 51% of multi-brand retail stores. The Indian government claimed the reforms would create jobs and modernise the country's supply chain. As the ruling was made by the cabinet, it did not to go to a parliamentary vote.
Opponents of greater foreign investment, including key government allies like Banerjee, were furious about the move and began a series of protests that caused parliamentary proceedings to grind to a halt. They claim giving retailers like Wal-Mart Stores, Tesco and Carrefour greater access to Indian's retail market would cripple local businesses.
Sudip Bandhopadhyay, leader of the Trinamool Congress, which strongly opposed the FDI reforms, told the Indo-Asian News Service after the meeting: "It has been accepted. Whatever you may want to call it, holdback or rollback, it is not being implemented."
Some opposition politicians said it signalled the death knell of the proposals.
Jon Copestake, retail industry analyst at the Economist Intelligence Unit (EIU), described the move as "a blow" for global retailers.
He also believes that resurrecting the bill could prove difficult given the timing. State elections are looming next year and weak economic signs in September have made opposition voices difficult to ignore.
"Even if this is just a temporary setback it could prove costly," he adds. "Domestic players such as RP-Sanjiv Goenka Group, Future Group and Bharti Retail will have to wait for planned funding or tie-ins with international partners, which will hamper growth plans in the coming year."
As consumer confidence remains stagnant, retailers have embraced the upcoming Jubilee celebrations and Olympics in the hope that the celebratory spirit will loosen consumers' wallets. Will the Jubilee...
Just-style attended the Retail Week Supply Chain Summit, which brought together a number of key supply chain executives to consider some of the greatest challenges facing the sector. Here are some of ...
Shares in Wal-Mart de Mexico y Centroamerica plummeted this week as allegations the company bribed officials to speed up store openings prompted many shareholders to offload the stock at a rate of kno...
Wal-Mart's Indian division has reportedly appointed a team in India to brief employees on its anti-corruption compliance programme....
Top stories on just-style this week include analysts' views on M&S reporting a 0.2% rise in clothing sales during its first quarter, American Eagle Outfitters looking to sell off part or all of its ch...
Leading global brands and retailers including H&M, Levi Strauss, Carrefour and Tesco have backed a three-year programme to clean up production in the Bangladeshi garment industry....
French retail giant Carrefour has sped up its transition to a new CEO, with Georges Plassat taking over the role a month early....
- Li & Fung looks to new frontiers for growth
- SOURCING: Worldwide change in cost competitiveness
- More licensing and less M&A for Global Brands
- Better Work programme poised to expand
- Fitness fashion propels Athleta towards $1bn sales
- Cambodia mass faintings rise to 896 in first-half
- Ralph Lauren unveils high-performance Polo shirt
- Cambodia garment makers condemn strike protests
- Russia threatens ban on western apparel imports
- China minimum wage rises will be tough to handle
- Global Database of the Top 1000 Apparel Producers - Company Names, Financial Performance, Key Executives, and Contact Details
- Global market review of denim and jeanswear – forecasts to 2020
- Prospects for the Textile and Clothing Industry in Turkey
- Global Database of the Top 1000 Apparel Knitting Mills - Company Names, Financial Performance, Key Executives, and Contact Details
- China - ISA Country Report