Political opposition: India puts supermarket plan on hold

Landmark reform will open $450b industry to global players.

India has put a plan to open up its retail industry to foreign supermarkets on hold, a senior government source said on Sunday, postponing the landmark reform as it fights to retain the support of key allies.

The move to allow global giants such as Wal-Mart into India’s $450 billion retail market, the first major economic reform since Prime Minister Manmohan Singh’s graft-riddled term began in 2009, has been met with fierce opposition from some who say it will destroy the livelihood of millions of small traders.

“This is a pause,” a senior government source with knowledge of the matter told Reuters. “Do not see it as a rollback, as if the government is giving up on it. This is just a small pause.”

The idea appears to be to give the beleaguered ruling party time to gain the support of its key coalition allies. “This is just Indian politics,” the source added. “Parliament is being stalled by an issue that only a few months ago everyone was in agreement with.” The leader of the ruling Congress party’s biggest ally, who opposes the policy and on whose votes Singh relies, said on Saturday the government had told her the plans would be put on hold until a consensus had been reached.

Congress officials were still negotiating with the party’s allies on the issue and said the policy had not been abandoned, local media reported on Sunday citing unnamed sources.

Allowing foreign direct investment into the retail industry is one of a basket of reforms, seen as key to sustaining India’s continued growth, that have been postponed over the past 18 months as the government reels from scandal to scandal.

The main opposition Bharatiya Janata Party has led protests against the reform in parliament that have paralysed both chambers every day since the 21-day winter session opened last week.

Published in The Express Tribune, December 5^th, 2011.