The euphoria over the decision to open up India's retail trade industry to foreign companies turned into despair after the
suspension of the decision on Wednesday owing to
political pressure from both within and outside the ruling coalition.
India Inc, which had hailed the decision taken last month as one that signals movement forward in the reforms process and one that will help farmers, consumers and small and medium enterprises, felt let down and said it also sends
wrong signals overseas.
FDI in retail will spell doom for retailers, kirana stores: Traders body "The government decision to hold back up to 51 per cent FDI in multi-brand retail and 100 per cent in single brand retail is deeply disappointing," said Harsh Mariwala, president, Federation of Indian Chambers of Commerce and Industry (Ficci).
"It is a highly regressive move. For the growth of this vital sector of the economy which is likely to result in strong linkages with the farm sector and for the economy as a whole it is imperative that the reforms like these should take place," Mariwala said.
Retail tie-ups take backseat amid politics on FDI Earlier this week the Confederation of Indian Industry (CII) hoped that there will be early
consensus among political parties on the FDI in retail issue, as it felt the move would be in national interest and create jobs and benefit farmers as well as consumers.
"Holding back the cabinet decision on
foreign direct investment (FDI) in retail due to political opposition is a clear case of missed opportunity that will dent the country's image as a global investment destination," a leading industry lobby Assocham said.
"It is a clear case of missed opportunity that would have created over 10 million of new jobs in three years, curbed agricultural wastages, benefited farmers with better prices for their produce and brought down prices of many commodities for consumers."
Only 4% of India's retail sector organised: CII In a decision taken on Thanksgiving Day, Thursday November 24, a meeting of the cabinet presided over by Prime Minister Manmohan Singh had decided to allow up to 51 per cent foreign equity in multi-brand retailing and enhance the cap on single-brand format to 100 per cent.
But with stiff opposition from both within the ruling United Progressive Alliance (UPA), notably the Trinamool Congress and the DMK, as also persistent logjam in parliament due to an unrelenting opposition, the decision was "suspended" pending consensus.
Expressing disappointment over the issue, Chandrajit Banerjee, director general, Confederation of Indian Industry (CII), said the decision to hold back FDI in retail would have a strong negative impact on investors' sentiment.
"FDI in multi-brand retail would have multifarious advantages to farmers, micro, small and medium enterprise, consumers and government alike," he said.
Banerjee expressed hope that there would not be any roll back and a "quick consensus" will be built on the issue. "FDI in multi-brand retail is an important reform agenda and this offers India a great opportunity," he said.
"Holding back the cabinet decision on foreign direct investment (FDI) in retail due to political opposition is a clear case of missed opportunity that will dent the country's image as a global investment destination," leading industry lobby Assocham said.
"It is a clear case of missed opportunity that would have created over 10 million of new jobs in three years, curbed agricultural wastage, benefited farmers with better prices for their produce and brought down prices of many commodities for consumers."
- with inputs from IANS
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