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Divyakant Solanki / EPA
An Indian vendor takes a nap at the wholesale and retail market in Mumbai, India, Sept. 15. India decided on Sept. 14 to open its retail sector to foreign supermarkets, in what could be a major economic reform that had been blocked last year due to political opposition. The cabinet committee on economic affairs (CCEA), headed by Prime Minister Manmohan Singh, decided to permit up to 51-per-cent foreign direct investment in companies such as department stores that sell items from multiple brands, Commerce Minister Anand Sharma announced in New Delhi. Global chains like Wal-Mart Stores Inc and Tesco Plc have already expressed an interest in entering India's lucrative 500-billion-dollar multi-brand retail sector.
Decades ago, India banned foreign ownership in main business sectors.
The government's surprise announcement Friday that it will allow foreign investment in retail and aviation and the sale of minority stakes in four state-run companies evoked sharp criticism from opposition parties and some of the ruling Congress party's coalition allies. A day earlier, the government announced a hike in the price of diesel fuel.
Hundreds of supporters of the Hindu nationalist Bharatiya Janata Party held a rally in New Delhi demanding that the government reverse its decisions, saying they would hurt the poor.
-- Reported by the Associated Press
Rupak De Chowdhuri / Reuters
People shop for clothes at a roadside market in Kolkata, Sept. 15.
Divyakant Solanki / EPA
Indian customers shop at the wholesale and retail market in Mumbai, India, Sept. 15.
Rupak De Chowdhuri / Reuters
People shop for clothes at a roadside market in Kolkata, Sept. 15.
Ajit Solanki / AP
Indian members and supporters of Gujarat Parivartan Party (GPP) shout slogans during a protest in Ahmedabad, India, Saturday, Sept. 15. Angry Indian opposition parties protested on Saturday against the government's decision to open the country's huge retail market to foreign retailers, a hike in the price of diesel fuel and reduction in cooking gas subsidies. The mock cooking gas cylinder reads as "Down with price rise."
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Open up aviation, but not retail for now. Currently Aviation would benefit by new capital and modernization. But when retail changes to big box stores like Walmart, it turns whole market regions into deserted ghost towns - like happened all over US. True consumers will get a slightly lower price on most items, but this kind of change will work only when the rest of the economy is developed (like they did in the US). Bringing in big box stores should be done then. Else it would lead to stagnation of retail, and economy.