India’s biggest reform initiative in recent times has been put on hold. On Monday the UPA told opposition parties it had frozen its plans to allow FDI in the retail sector. But the opposition led by the BJP continue to insist those plans be scrapped entirely. The Congress-led UPA has also been under intense pressure from its own allies to reverse the decision. In particular, Bengal chief minister Mamata Banerjee has made it clear she will not back move. Last month, the Union cabinet approved 51% FDI in multi-brand retail and 100% FDI in single-brand chains.
And shares of several Indian retailers dropped on Monday in reaction to the government’s move to put FDI on hold. Pantaloon Retail plunged 12.86% on the BSE to 186.40 on a day the Sensex lost just 0.25%. And Koutons Retail tumbled 6.49% by the end of trade at 19.45. Meanwhile, CESC, which runs Spencers lost 4.30% to end at 249.10. One retailer that bucked the trend was Shoppers Stop, which registered a 1.11% rise to 365.20 after making initial losses.
In other news, India’s services industry is back in expansion mode. New figures show the sector grew in November after contracting in October. The HSBC Markit Purchasing Managers’ Index for services stood at 53.2 for the month. The previous month it was at 49.1. Any figure above 50 on the index indicates a gain.