The Telegraph
Monday , April 7 , 2014
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Waiting game till polls in retail FDI

New Delhi, April 6: Global players such as Walmart and Carrefour have adopted a wait-and-watch policy on entering multi-brand retail till a clear picture emerges as to who will form the government at the Centre.

Analysts advising them said the current political scenario was highly uncertain as to which party would come to power and what economic policy it would adopt.

According to the analysts, it would be better to wait for another couple of months as these companies were committed to be in the country for the long term.

“Nobody knows who is coming into power in the next couple of months and what will be their economic policy. It is better to wait and watch than regret later,” an analyst with retail advisory firm said.

After the entry of UK retailer Tesco in multi-brand retail in December, commerce minister Anand Sharma had said another player would set up shop soon.

However, officials in the department of industrial policy and promotion (DIPP), the nodal agency for FDI, said they had not received any application after Tesco’s $110-million proposal.

Tesco was the first applicant after the government allowed 51 per cent foreign direct investment in multi-brand retail in September 2012. It came two months after Wal-Mart Stores and Bharti Enterprises said they would go their separate ways.

Tesco plans to operate stores under various banners, including Star Bazaar, Star Daily and Star Market.

The government had hoped French retailer Carrefour would follow suit.

The Congress in its manifesto has made a pitch for opening up the multi-brand retail sector as it will “transform the agrarian economy and create value chain between farm to fork creating rural infrastructure…and farmers getting better value for their produce”.

The BJP, which several opinion polls suggest could win the parliamentary elections, has been opposed to the opening up of the sector as it would have an impact on small shops.

However, the party’s prime ministerial candidate Narendra Modi recently spoke in favour of opening up the sector to global competition.

There will be clarity on BJP’s official position when it releases its manifesto.

Other political parties such as the Aam Aadmi Party and Trinamul Congress are also opposed to the entry of global players in multi-brand retail.

Over the past few years, the Congress-led UPA government had eased the FDI rules to woo global retailers.

“The global players can wait to enter the Indian market, but cannot ignore it given the robust economy picking up pace, sheer size of the market and its long-term potential,” analysts said.