The government resolutely faced a vote of no-confidence in Parliament last year over its decision to allow entry to foreign supermarkets, but it is unlikely to reap any benefit as global retail chains have decided to wait for the outcome of state polls later this year and 2014 general elections before pledging investments.
BJP’s virulent opposition to their entry has made them nervous, and they don’t want to be caught in no-man’s land if the party comes to power and scraps the multi-brand retail policy. While Narendra Modi, BJP’s presumptive PM candidate, has the reputation of being pro-business, he has banned the entry of foreign retailers in his state Gujarat.
Foreign retailers are currently allowed to open stores in 12 states. Of these, 11 are Congress ruled while the 12th, Jammu & Kashmir, is ruled by a National Conference-Congress coalition. But two of the states — Delhi and Rajasthan — will go to polls in the next few months.
The UPA government at the Centre is expected to soon announce a fresh set of clarifications that could further ease entry norms for foreign retailers. Commerce & Industry Minister Anand Sharma, who has led the government’s drive to open up the retail sector to foreigners, recently met with global and local retailers in Delhi. He is expected to meet top Walmart executives during his visit to the US.
While foreign retailers want to analyse the political alignment post the general election, some are cautiously optimistic that there will not be a dramatic about turn in India’s policies. For the past two decades, successive governments have shied away from opening up the country’s multi-brand retail sector to foreign investments due to opposition from small vendors as well as top politicians, as they feared liberalisation of the sector could jeopardise the livelihoods of millions of small and marginal retailers. However, in September 2012, the Congress-led government went ahead and opened up the sector and even went to the extent of risking its survival on the issue. But about 10 months later, the government has not received a single investment from a foreign company.
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