Business, Finance & Economics

Indian opposition shutters parliament again with protest against FDI in retail


Until last week, foreign retailiers could only open wholesale stores like this Wal-Mart outlet in northwestern Punjab state's Jalandhar. But India is set to allow 51% foreign direct investment in multi-brand retail stores -- if the government can survive an ongoing blitz by the opposition.



The Indian parliament was again forced to shut early Monday by a standoff over the government's decision to allow foreign companies to hold majority stakes in multi-brand retail outlets -- paving the way for supermarket chains like Walmart.

NDTV reported that chaos ensued Monday over the opposition's demand for a vote on the move to increase the cap on FDI in multibrand retail to 51% and allow 100% foreign ownership in single-brand stores. The opposition wants to discuss the government's decision under an adjournment motion - which would end with a vote. But the government has only conceded to a debate without a vote on the measure, the news channel said.

An adjournment motion allows a member of the House to ask that regular business be suspended to discuss an urgent matter of public interest. It includes a debate and ends with a vote that tests the government's strength. The opposition's insistence on a vote is seen as a pressure tactic - what it really wants is for the government to put its decisions on retail on hold till the matter is extensively debated in Parliament.

The list of parties and states attacking the move to increase FDI in retail is embarrassing for the government, NDTV said. Some of the Congress party's most important allies, such as Trinamool Congress chief Mamata Banerjee, have expressed their dissent and even the Congress party's own branch in Kerala has opposed the measure.  Opponents say allowing foreign retailers into the market will drive mom and pop shops out of business and thus increase unemployment, while supporters say foreign players will create a much needed supply chain linking the rural markets to urban centers and create 10 million new jobs.

Assuming that this debate doesn't end with a no confidence vote and the end of Manmohan Singh's second term as prime minister, foreign players will still face problems in the Indian market, the Times of India reported.

Due to state-level opposition to FDI in retail, as many as 25 out of the 53 cities with a population of more than a million may be out of bounds for foreign companies, the paper said.