News / Economy

Two Indian States Bar Foreign Supermarkets, Denting Investor Confidence

FILE - Indian people shop at a Bharti-Walmart store on the outskirts of Chandigarh, India.
FILE - Indian people shop at a Bharti-Walmart store on the outskirts of Chandigarh, India.
Anjana Pasricha
In India, two newly elected state governments have rolled back decisions to allow the entry of foreign supermarkets. This is yet another blow to the country’s hopes of winning foreign investment in the retail sector, and could further shake global investor confidence in India.
 
The decision by the northern Rajasthan state earlier this month to bar foreign direct investment by overseas retail chains such as Walmart followed a similar move by Delhi.
 
New local governments took charge in both states in December -- led by the Bharatiya Janata Party in Rajasthan and the Aam Aadmi Party in Delhi. Both parties oppose foreign supermarkets, fearing they could take away local jobs.
 
The federal government allowed global retailers to enter India more than a year ago in the face of stiff political opposition, but it left it to individual state governments to make the final call. So far, fewer than half the country’s 28 states have given a go-ahead to foreign retail chains.
 
Arpita Mukherjee at the Indian Council of International Economic Relations in New Delhi said the decision by the Delhi and Rajasthan governments will further dampen the enthusiasm of foreign retailers, who are already disheartened by tough regulations on their entry into a market that she called “very difficult to operate."
 
“This is the first time that we have a rollback of the policy, and that gives very, very wrong signals to investors. India is a large market, but it is a highly fragmented market and our growth rate has slowed down. India is not an easy market to set up your supply chain,” said Mukherjee.
 
So far, Britain-based Tesco is the only global chain to propose an investment in India. It announced in December that it will invest $110 million and partner with a local company to set up three to five local stores every year.
 
That is some positive news for India, which had hoped to attract billions of dollars in a retail market estimated to be worth $500 billion.
 
However, industry analysts think most retail chains are waiting to see who takes charge of India’s next government after elections, to be held by May. The ruling Congress Party, which allowed the entry of supermarkets, is expected to lose power. The BJP, which is tipped to win, is broadly considered more business-friendly. However, the party opposes foreign supermarkets on the grounds that they could impact the livelihood of small shopkeepers - a core support base.  
 
Devangshu Datta, heads of Third Eyesight consultancy, which focuses on the retail sector, stressed the importance4 of predictability for foreign investors.
 
“If there is one thing that any investor looks at, it is predictability in any form. From that perspective, any reversal, and especially quick reversals, are negative, and that makes any investor who is already cautious even more cautious. Unfortunately that is the environment we are operating in at the moment,” said Datta.
 
What happens in the retail sector could be key as India seeks to restore international investor confidence and give fresh momentum to its flagging economy.

You May Like

Ukraine Purges Interior Ministry Leadership With Pro-Russian Ties

Interior Minister Avakov says 91 people 'in positions of leadership' have been fired, including 8 generals found to have links to past pro-Moscow governments More

US Airlines Point to Additional Problems of any Ebola Travel Ban

Airline officials note that even under travel ban, they may not be able to determine where passenger set out from, as there are no direct flights from Liberia, Guinea or Sierra Leone More

Nigerian President to Seek Another Term

Goodluck Jonathan has faced intense criticism for failing to stop Boko Haram militants More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Talks to Resume on Winter Gas for Ukrainei
X
Al Pessin
October 25, 2014 4:21 PM
Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Talks to Resume on Winter Gas for Ukraine

Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.

All About America

AppleAndroid

World Currencies

EUR
USD
0.7893
JPY
USD
107.68
GBP
USD
0.6238
CAD
USD
1.1214
INR
USD
61.185

Rates may not be current.