India will follow through with reforms: minister
NEW DELHI: India will abide by a controversial decision to open retail and other sectors to wider foreign investment, the country’s trade minister promised delegates at an international financial conference Thursday.
“What we have done is irreversible, what is cast in stone cannot be set aside,” trade minister Anand Sharma told the World Economic Forum on India.
Since September, the government has approved rules inviting more foreign investment in the retail, broadcasting and aviation sectors.
The Congress party-led government has also proposed higher overseas ownership levels in the under-capitalised insurance and pension industries. But these steps require parliamentary approval by India’s fractious parliament.
Sharma appealed to opposition parties to approve the moves to bring foreign capital into the under-resourced insurance and pension sectors “in the national interest”.
The reforms have already cost the government its parliamentary majority with the exit of a key ally who has threatened to bring a no-confidence motion against its former partner when the house reopens later this month.
The media has dubbed the country’s second reform push a “big bang” following Prime Minister Manmohan Singh efforts when he was finance minister to begin opening India’s economy to the world two decades ago.
But whether the reforms will usher in any big changes in the near future is still unclear.
Just nine of India’s 29 states say they will implement the retail reform and allow in foreign supermarkets, with the others fearful of the effect on small store owners who dominate the commercial landscape.
Some global retailers have also been cool to India’s opening of the retail sector and there has been no reported serious interest among global airlines for stakes in Indian carriers, several of which have heavy debts and are lossmaking.
US giant Walmart, which already has wholesale operations in India, plans to open its first outlet in the next 18-24 months.
But other large retailers like Britain’s Tesco and France’s Carrefour, which initially expressed interest, have been non-committal.
Tesco executive director Lucy Neville-Rolfe told reporters on the sidelines of the World Economic Forum that the British retailer was looking at opening retail stores in India.
But she said it would have to first examine the “unusual” sourcing conditions for foreign investment in the multi-brand segment.
The government has stipulated that foreign retailers must source at least 30 per cent of their products from small- and medium-sized enterprises, which some analysts have said might be unable to supply the volume of goods required.
“Clearly, we need to study the conditions,” Neville-Rolfe said.
Meanwhile, an executive of Germany’s retail group Metro, which operates a dozen wholesale outlets in the country, said it would not open any stores, citing India’s bureaucratic red tape as one of the stumbling blocks.