There’s been a setback for the move to expand foreign investment in the retail industry. The UPA government has caved in to mounting pressure on the issue. On Monday the commerce ministry made it clear that the foreign retailers would have to source 30% of their goods from small-scale industries in India. Last week did not specify the country the small industries would have to come from.
Pressure mounts on government over FDI in retail; RBI approves Air India’s debt restructuring plan; Kanimozhi gets bail in the 2G case
Opposition parties led by the BJP are demanding the UPA withdraw its decision on FDI in retail. On Monday they stormed out of both houses of Parliament, causing them to be adjourned. The UPA is also facing resistance from within the Congress party, where many leaders believe the decision was ill-timed. Congress president Sonia Gandhi has held discussions with Prime Minister Manmohan Singh and commerce minister Anand Sharma over the issue.
In other news, there’s big relief for Air India. The Reserve Bank has given the green-light to the struggling airline’s debt recast plan. It has accepted some of Air India’s requests and rejected others. For one, it will let banks treat Air India’s loans as standard assets after the recast, which means much less provisioning is needed. But it has turned down requests for normal risk weightage-- and exemptions from downgrades of its debt. Air India’s restructuring plan involves turning Rs11,000 crore worth of short-term working capital into long-term debt. It also plans to convert another Rs7,000 crore worth of debt into equity.
People shop at an Indian retail store in Jammu (AP)
More of the top accused in the 2G case have received bail. On Monday the Delhi high court granted bail to DMK leader K. Kanimozhi and four others. All five will have to provide a surety of Rs5 lakh. The Delhi high court’s decision comes a week after the Supreme Court granted bail to five others including Sanjay Chandra of Unitech.
And finally, Indian markets bounced back on Monday, with the Sensex registering its biggest one-day gain in three months. The Sensex jumped 472 points to 16,167. And the Nifty went up 141 to 4,851.