* Key ally says govt told her plans to be put on hold
* Opposition to plans inside ruling coalition
* Policy seen key to continued economic growth
By Henry Foy
MUMBAI, Dec 3 India's government will put
a plan to open up its retail industry to foreign supermarkets on
hold until it reaches consensus within the coalition, risking a
possible dilution of the policy rather than a change of heart.
The decision to allow global giants such as Wal-Mart
into India's $450 billion retail market, the first major
economic reform since Prime Minister Manmohan Singh's
graft-riddled term began in 2009, has been met with fierce
opposition from some parties who say it will destroy the
livelihood of millions of small traders.
Mamata Banerjee, who is against the policy and whose
Trinamool Congress brings 19 votes to the ruling Congress
party-led coalition, said that Finance Minister Pranab Mukherjee
had told her that the policy would be put on hold.
Banerjee has previously pledged not to use the issue to
bring down the government, and refrained from saying that
consensus was impossible.
"(Mukherjee) has told me that the centre has decided to
suspend implementation of the decision to allow FDI in retail,"
Banerjee, chief minister of West Bengal, told reporters in
Kolkata in a press conference broadcast on local television.
"He has told me that the decision will not be implemented
unless there is consensus on the issue," said Banerjee, who has
announced her opposition to the policy.
It was not immediately clear what the postponement would
entail or whether negotiations were continuing on Saturday. A
Congress spokesperson was not reachable for comment.
In India's multi-party democracy, major parties are often
forced to rely on fickle coalition allies, who often use the
importance of their votes in New Delhi to negotiate concessions
or support for the regions or states they represent.
Possible dilution of the policy could include lowering the
51 percent foreign investment permitted under the current rules,
or increasing the percentage of products to be sourced locally,
or the amount firms must spend on developing infrastructure.
With a thin parliamentary majority, the government is
dependent on allies but does not face any immediate threat of
losing power. Trinamool's votes would be required to bring the
policy into law.
'WAL-MART DOES NOT SERVE US'
Any retreat on the policy would be seen damaging India's
image with foreign investors as Asia's third-largest economy
shows signs of slowing, and would add to a basket of key
economic reforms that have been shelved by Singh's government.
A senior leader of the main opposition Bharatiya Janata
Party (BJP) said the government was fooling the country about
the benefits of foreign supermarkets,
"Wal-Mart may be fine for (the West) but Wal-Mart does not
serve us," L.K. Advani, a former president of the BJP and leader
of the opposition from 2004 to 2009, told a summit in New Delhi.
"We should not be envious of Wal-Mart," Advani said.
Allowing foreign direct investment (FDI) into the retail
industry is one of a basket of reforms, seen as key to
sustaining India's continued growth, that have been postponed
over the past 18 months as the government reeled from scandal to
The controversy has drawn on some deep-seated nationalism in
the right-wing BJP, which appeared to support the policy in 2004
but has now jumped to the support of millions of small
shopkeepers that they see as a key vote base.
The BJP has led protests in parliament that have paralysed
both chambers every day since the 21-day winter session opened
Its opposition to the policy stands in stark contrast to its
free-market stance and is the latest move by an increasingly
populist opposition that has sought to portray Congress as out
of touch with common Indians as elections loom in 2014.
"To give an impression that FDI in retail will solve all
problems like inflation, price rises, unemployment... whosoever
is saying this is fooling people that FDI will get millions of
jobs," Advani said. "It cannot happen."
Singh this week rejected calls to roll back the policy amid
media reports that some of his coalition partners were thinking
of adding their voice to the opposition.
"Local retailers have been content thinking small and doing
little. It's time to change that mindset by opening up to FDI in
retail," the Economic Times said in an editorial on Saturday.
The reform, as it stands, would allow global chains like
Wal-Mart, Tesco Plc and Carrefour to own up
to 51 percent of retail ventures and allow foreign firms to
fully own single-brand retail operations.
Congress ministers have strongly defended the decision,
saying that it will create millions of jobs, improve creaking
supply-chain infrastructure and bring down stubbornly high
inflation which is crimping economic growth.
The controversy comes as the party fights to fend off
accusations of corruption and a failure to tackle high prices
before state elections due next year.