After two days of sometimes ear-splitting debate, India’s Lok Sabha, or lower house, of Parliament voted down a measure prohibiting large foreign retailers like Wal-Mart from entering the country. Of the 543 members in the house, 218 voted in favor of a proposition banning these companies from the country, and 253 against.
Rival leaders from Uttar Pradesh, Samajwadi Party leader Mulayam Singh Yadav and Bahujan Samaj Party leader Mayawati, walked out before the debate and their parties’ abstentions helped defeat the measure.
The issue will now travel to the upper house of Parliament.
Allowing foreign multi-brand retailers into India has been a matter of debate for years, and was fast-tracked this year by a government under fire from allegations of corruption and paralysis. Here’s recent India Ink coverage on the issue:
The United Progressive Alliance government announced in September that they would allow big department stores who carry multiple brands, like Wal-Mart Stores, into the country but “laid out some very specific conditions,” Heather Timmons reported.
In an interview with India Ink in the same month, Anand Sharma, the minister of commerce and industry, said that despite the conditions some companies had “already expressed interest, from Tesco to Carrefore to Wal-Mart and Marks and Spencer.”
Explaining the benefits for rural producers he said:
“It will benefit the rural economy with the farmers, who will get a better price for what they produce. What perishes to a large extent will reach the market or the kitchens.”
The announcement was met with skepticism from industry and analysts, Vikas Bajaj reported, but there was hope that “If they follow through, it could prompt a new economic boom in India, where once-brisk growth has slowed markedly in recent years. But it is a big if.”
In a later article he focused on the way foreign direct investment in retail “often divides Indians as much by age as by their livelihoods.”
“Those younger than 25, a group that includes about half the country’s 1.2 billion people, appear quite open and eager to try foreign brands and shopping experiences, researchers say,” Mr. Bajaj wrote.
The Prime Minister, in a rare address to the nation, tried to assuage small retailers’s fears in late September, by saying that they “had nothing to fear from the impending arrival of giant Western retailers like Wal-Mart or Carrefour because there was a place for everyone, large or small, in a growing economy.”
The government may be overly optimistic about the benefits of allowing foreign direct investment into the retail sector, judging by Wal-Mart’s experience in other countries.
And even if that is not true, “any long-term impacts of Wal-Mart’s Mexico business have been overshadowed this year by the company’s involvement in a bribery scandal there,” and was “sure to find similar demands for bribes in India – especially now that ample evidence exists that the company has paid them elsewhere,” Heather Timmons wrote in an article titled, “Can Wal-Mart Build a Nation?”
In November, Wal-Mart said that an internal “investigation into violations of a federal anti-bribery law had extended beyond Mexico to China, India and Brazil, some of the retailer’s most important international markets,” Stephanie Clifford and David Barstow wrote in the New York Times.
India Ink: India's Parliament Opens Door to Foreign Retail Investors
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India Ink: India's Parliament Opens Door to Foreign Retail Investors
