The much-publicized decision by the Indian government to allow more foreign direct investment (FDI) in the retail sector is up in the air after some in the political elite opposed the move. As reported in the last issue of SGI Europe, India decided a few weeks ago to allow FDI of up to 51 percent in multi-brand stores and 100 percent in mono-brand stores, up from previous limits of 49 percent for multi-brand stores and 51 percent for mono-brand shops. However, after an outcry from the opposition, India is now holding off on extending the limit for multi-brand retailers. The mono-brand limit is still slated to increase. The government said the change would create jobs and modernize India's supply chain, but opponents said it would allow international multi-brand retailers such as Wal-Mart and Carrefour to come in and destroy local businesses. Now, the government says it will confer with all stakeholders, including chief ministers in all of the country's states and political parties, to get a consensus on the matter. Some insiders have been reported as saying that it would probably be difficult if not impossible to resurrect the new rule in the wake of the suspension.

Topics