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Behind India's U-turn on retail revolution

Wednesday, December 07, 2011 - 01:55

Dec. 7 - India's messy retreat from opening up its retail sector to foreign investment is causing a backlash from investors, and the consequences will be borne by regular folks, analysts say. Lisa Yuriko Thomas reports.

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PLEASE NOTE: EDIT CONTAINS CONVERTED 4:3 MATERIAL Victory for India's army of small shop owners. They can breathe easy again after the government backtracked on plans to open up the country's retail industry. Speaking today in New Delhi, India's federal minister and chief of the national conference all but dashed hopes of a quick resolution. (SOUNDBITE) (Hindi) INDIA'S FEDERAL MINISTER AND CHIEF OF THE NATIONAL CONFERENCE, FAROOQ ABDULLAH, SAYING: "The issue of Foreign Direct Investment has been kept under suspension till we hold discussions with all the political parties, all the chief ministers and all the stake holders, then only the government will take any decision or formulate any further strategy." It was supposed to be one of India's boldest reforms in years. To open up the country's $450 billion retail sector to foreign companies. But the move sparked mass protests from mom and pop stores - which make up 90% of the country's shops. Their concerns were seized on by opposition politicians. Losers include foreign companies, such as Wal-Mart and Tesco, eager to grab more rupees from a population of 1.2 billion people. Foreign investors have also criticised the move, accusing the government of adding to uncertainty. But Anil Gupta, a professor at the University of Maryland and at INSEAD - says the lack of a near-term deal hurts regular people the most. (SOUNDBITE) (English) MICHAEL DINGMAN CHAIR IN GLOBAL STRATEGY & ENTREPRENEURSHIP AT THE UNIVERSITY OF MARYLAND, ANIL GUPTA, SAYING: "That's a one to two year time frame - that's a waste of time, wasted time for India. FDI in retail - permitting it - that would be very good for Indian consumers, Indian farmers, and to get hung up on what it means for small shopkeepers is absolute nonsense." With no resolution in sight, India's retail revolution will have to wait. That means business as usual for India's small shopkeepers. Lisa Yuriko Thomas, Reuters.

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Behind India's U-turn on retail revolution

Wednesday, December 07, 2011 - 01:55