Int’l retailers find passage into giant Indian market
NEW DELHI - Reuters
Customers shop inside a Best Price Modern Wholesale store, a joint venture of Wal-Mart Stores and Bharti Enterprises, at Zirakpur in northern India. REUTERS photoThe Indian government bowed to intense opposition pressure and agreed yesterday to a vote on its decision to let foreign supermarkets set up shop in India, taking a major step towards ending a deadlock that has paralyzed parliament for days.
In finally conceding to a symbolic vote on its flagship economic reform, Prime Minister Manmohan Singh’s fragile coalition appears to have calculated that it has the numbers to overcome opposition demands for the measure to be rolled back.
The debate will begin next week in the lower house, with voting likely the next day, members of parliament told reporters. A vote will also take place in the upper house.
A lot is at stake for Singh’s minority government. If it loses the vote it would be more than just an embarrassing setback. It would likely face intensified pressure to reverse its executive decision in September to allow foreign direct investment (FDI) of up to 51 percent in domestic supermarkets.
“It is most crucial for government and the country at this stage that the vote on FDI musters a majority otherwise it will be a symbolic blow for the government,” said Paresh Nayar, head of fixed income and forex trading at First Rand Bank.
“India is a deficit country and needs all foreign flows to manage the rupee, to cut deficits and to push GDP,” he said.
India’s economy is set to grow at its slowest pace in a decade this fiscal year. Manufacturing is contracting and exports are falling. October’s trade deficit of nearly $21 billion was its worst on record Wal-Mart, the world’s biggest retailer, plans to open its first supermarket in India in 12 to 18 months. Meira Kumar, speaker of the lower house of parliament, or Lok Sabha, announced the vote.
While the government could muster a majority there, the vote in the upper house, or Rajya Sabha, will be harder to win. A loose government ally, the Samajwadi Party, has indicated it would vote against the government in the upper house.
The main opposition party, the right-wing Hindu nationalist Bharatiya Janata Party (BJP), and leftist parties have disrupted parliament for nearly a week with demands for a vote on the supermarket reform, which they strongly oppose. The government had resisted such a move and called instead for a debate.