| MUMBAI, April 7
MUMBAI, April 7 The political party expected to
lead India's next government confirmed on Monday it would ban
foreign supermarkets from the $500 billion retail sector, a move
that would deal a fresh setback to global chains such as
Wal-Mart and Carrefour.
The Bharatiya Janata Party (BJP), which has in recent years
opposed investment by foreign firms into multi-brand retail,
made the announcement in its election manifesto, which it
unveiled in New Delhi earlier.
If elected, the BJP said it would welcome foreign direct
investment in all sectors that create local jobs, except for
It is not clear, however, whether the BJP, which is forecast
to win the most parliamentary seats in a five-week election that
started on Monday, would follow through on the ban. The BJP is
likely to need coalition partners to form a government.
"Pre-election rhetoric and decision making post-election are
two different things," said a person who worked on the manifesto
but who declined to be named because he is not authorised to
speak to the media.
India's federal government gave foreign supermarket chains
the green light in September 2012, but then left if up to
individual states to enact the legislation. Many didn't, fearing
a backlash from politically powerful local traders, and this
regulatory uncertainty has put off many global chains.
The BJP and its prime ministerial candidate, Narendra Modi,
are perceived to be the more business-friendly of India's two
national political parties, but it counts among its key
supporters the millions of small traders who worry about being
run out of business by global chains.
So far, only Britain's Tesco PLC has made an
investment in India -- last month, it sealed a $140 million
joint venture with the Tata Group's Trent Ltd to
operate 12 stores in southern and western India.
Tesco's spokesman in India was not immediately available for
comment on the BJP's manifesto and did not respond to an email
sent by Reuters. An official at Trent, who declined to be named
as he was not authorised to speak to the media, said the BJP's
manifesto could cast doubts about the fate of the joint venture.
Asked to comment about the manifesto, a senior official at
Wal-Mart in India said he hoped the BJP would be open to
discussing their stance.
"We are interested in knowing if this a decision set in
stone or if they are willing to have discussions around it,"
said the official, who declined to be identified because he was
not authorised to speak to the media.
"If they are not open to talking then it's really very
unfortunate," he said.
Wal-Mart did not respond to an email sent by Reuters.
If implemented, the BJP's ban on foreign supermarkets may
spur further consolidation in Indian retail, where investors
have grown impatient with years of losses at most of the
country's supermarket chains, analysts said.
"Now we can actually expect conversations on valuations
because some companies will look at selling out as it will
simply be too difficult to run the business without external
funding," said Rachna Nath, who heads the retail and consumer
practice at consultants PWC.
(Additional reporting by Frank Jack Daniel in NEW DELHI;
Editing by Tony Munroe and Miral Fahmy)