* Foreign investment welcome in defence but not big retail
* General sales tax planned
* BJP eyes 250 million new jobs, 100 'smart' cities
* Congress manifesto targets inclusive growth
(Corrects to remove erroneous RIC)
By Shyamantha Asokan and Rajesh Kumar Singh
NEW DELHI, March 26 India's main opposition
party would welcome more foreign direct investment in defence,
if elected, but would delay opening up the country's market of
more than 1.2 billion people to international retail chains like
The nationalist Bharatiya Janata Party (BJP), which surveys
show is on course to win the most seats in an election starting
on April 7, would also introduce a general sales tax and
overhaul the financial sector, its manifesto will say.
Party sources told Reuters these concrete steps form the
core of a pitch to voters that sets ambitious goals of creating
250 million jobs over the next decade, building up to 100
'smart' cities and constructing a high-speed rail network.
"The manifesto's priorities, in this order, are jobs,
investment, manufacturing and infrastructure," one BJP official
involved in drafting the document revealed to Reuters before its
publication next week. He declined to be identified due to the
sensitivity of the topic.
The BJP's candidate for prime minister, Narendra Modi, is
campaigning on his economic record in running his home state,
Gujarat, where the party trumpets an unemployment rate of less
than a third of the national average.
By contrast the incumbent Congress party, which unveiled its
manifesto on Wednesday, is appealing to its core constituency of
poorer voters who it says should be given the chance to
participate in "inclusive" growth.
"Growth by itself is not sufficient," Prime Minister
Manmohan Singh told an event at which Congress president Sonia
Gandhi made a rare public appearance to support her son Rahul's
leadership of the party's flagging campaign.
While the BJP platform seeks to tap into the hopes of 100
million first-time voters whose job prospects have been hurt by
a slowdown in economic growth, the tenets of 'Modinomics' remain
nebulous beyond a broad focus on supply-side reforms.
"Most of these proposals have been discussed by other
parties too," said Shumita Sharma Deveshwar, a director at
Trusted Sources, a policy advisory firm. "The key is
implementation of these policies. That is the bigger challenge."
The BJP's policy platform takes a cautious stance towards
opening up the Indian economy, Asia's third largest, to foreign
There will be no quick move to allow the likes of Wal-Mart
Stores Inc. or Tesco easier entry into so-called
'multi-brand' retail, which would pose an existential threat to
small traders who form a key BJP constituency.
"The domestic retail industry needs to be first made
competitive before allowing foreign investment," a second BJP
However, the BJP would propose raising a cap on foreign
ownership of Indian defence industry enterprises to 49 percent
from 26 percent now.
Although India spends only a third as much as China on
defence, it is the world's largest market for arms exports -
reflecting a failure of past governments to turn around the
state-dominated domestic defence industry.
The legacy of dependence on the Soviet security umbrella has
been prolonged by corruption scandals that have held up deals
with foreign partners that would have moved production to India.
"We can save huge foreign exchange by producing defence
equipment at home," the source said.
"(We would) raise the FDI cap, (and) allow Indian companies
to enter into joint ventures with foreign companies. It could be
an arrangement where Indian partners hold the majority stake,
say 51 percent."
Elsewhere, the BJP is expected to propose a national general
sales tax - key to getting rid of a hodge-podge of existing
levies. More broadly, it will seek to improve tax collection by
lowering rates and closing loopholes.
A "broad consensus" exists to overhaul the financial sector
to turn India into an international hub, the source said.
Analysts caution that the BJP and its allies, which polls
show falling around 40 seats short of a majority, may end up
having to strike a series of compromises to cobble together a
"A lot of this is theoretical and open to question right
now," said Deveshwar. "Let's see what kind of coalition is
formed after the election."
(Additional reporting by Sruthi Gottipati and Frank Jack
Daniel; Writing by Douglas Busvine; Editing by Mark Trevelyan)