Indian lawmakers debate entry of foreign retailers

12/5/2012 1:30 AM
By Associated Press

NEW DELHI (AP) — Indian lawmakers on Wednesday debated the government's decision to open up the country's huge retail sector to foreign big-box companies like Wal-Mart, a move that opponents say will crush small shop owners and farmers.

The measure to allow foreign retail chains to do business in India is an attempt by the government of Indian Prime Minister Manmohan Singh to institute reforms that will shore up a heavily battered economy and bring in a fresh infusion of investment, which could also help farmers and small businesses.

"There would be improvements in the supply chain and an assured buyer for their products," Telecommunications Minister Kapil Sibal said during the debate.

But opposition parties say small retailers will not be able to withstand the competition from the global giants.

"Foreign companies are keen to expand their businesses in India as they see this as a big market. But our small businesses and traders will be wiped out," said Sushma Swaraj, of the main opposition Bharatiya Janata Party.

"Big retailers are not in the charity business. They will squeeze our farmers and small producers," she told lawmakers in the powerful lower house of the Parliament.

The government has argued that farmers would benefit because less of their produce would rot, small retailers would become more competitive and efficient and consumers will get lower prices and better quality.

Over the past few weeks, lawmakers who oppose the measure have kept Parliament's operations at a standstill, demanding a debate on the measure and then a vote on it. After initial resistance, the ruling Congress party agreed. The debate began Tuesday and a vote is to take place later Wednesday.

Congress says it is confident of winning the nonbinding vote with the support of its political allies. A loss would be a major embarrassment but would not stop the measure from being implemented.

The measure will allow foreign companies to own majority stakes in supermarkets and other big retailers for the first time. However, individual states would have the right to decide whether to let the retailers operate in their territory.

Wal-Mart, British-based Tesco PLC, French-based retailer Carrefour and others had been eyeing India. Retail is the second-biggest industry sector, behind agriculture, in the nation of 1.2 billion people.

Winning the vote would come as a major shot in the arm for Singh's beleaguered government, which has come under sharp criticism after a slew of corruption scandals over the past year. It would also affect the government's decision to bring in other longstanding financial reforms, including opening the insurance and pensions markets to foreign investors, both of which would require a vote in Parliament.


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