New Delhi: India is moving quickly on a plan to open its $450 billion retail sector to global players such as Wal-Mart despite concerns about job losses among millions of small neighborhood stores, India’s industry secretary said on Wednesday.
The emerging Asian power has dallied for years about bringing foreign investment to supermarkets. The move is seen by many as crucial to tame food prices but is resisted by small shopkeepers who are now the backbone in India’s retail economy.
Foreign retailers such as Wal-Mart, Carrefour SA, Tesco Plc and Metro AG want to invest directly in India’s fast growing retail market, but the policy has so far been held up by political resistance.
“Please don’t ask me for a timeline, but we are proceeding very fast,” industry secretary R.P. Singh told the news agency in an interview. “It’s certainly not on the back burner.”
Despite his optimism, the plan has not yet been approved by the cabinet, with job-loss concerns ahead of state elections next year and a general election in 2014, slowing policy.
Currently, up to 40% of India’s harvests rot because of inadequate cold storage and supply bottlenecks, a situation some economists say foreign money in supermarkets will help resolve.
“The idea is that the multi-brand retail should be able to help us in addressing the infrastructure gap, so the back end infrastructure is very important for us,” Singh said. However, he said concerns that such conditions would be too restrictive on companies were unfounded. “Conditions are not such that they will reduce the viability of the global players here,” he said.
A committee of top civil servants, of which Singh was a member, in July agreed to recommend to the cabinet allowing foreign firms to take a 51% stake in such multi-brand retail operations.
Turning to wider economic issues, Singh also told the news agency that industrial growth was weak in August, as businesses held back investments because of high inflation and interest rates.
India’s industrial growth slumped to its weakest rate in nearly two years in July.