FDI in Retail: Lack of Political Will Sees Govt Hit Pause.

On July 22, when the Committee of Secretaries gave its nod to 51% FDI in multi-brand retail, there was reason to believe that it was only a matter of time when the long anticipated proposal will be cleared by the government. But according to sources, foreign retailers will not be allowed to open front-end stores till mid 2012, reports CNBC-TV18's Elan Dutta.

After scenes of protests against organized retail in October 2007, it seems UPA-II has not overcome its fears over permitting foreign retailers in India.
The Wal-Mart’s and the Carrefour’s of the world will have to wait as the government has paused on this front. Sources in the government have told CNBC-TV18 that with the impending elections in UP, a political call has been taken to keep the proposal on the backburner until at least mid 2012.

The UPA II, which is seeking to garner more seats in the crucial state elections, has not forgotten the protests against retail FDI in Noida, Lucknow and many other cities in UP in 2007, when UPA I had first initiated the proposal.

While government sources confirm the delay, political and technocrats in the government have only given indications.

Finance Minister Pranab Mukherjee argued that there should be wider debate.

In fact, the government now wants to focus on reforms that are pending in Parliament.

Deputy Chairman of the Planning Commission Montek Singh Ahluwalia said, “I do not regard this as a game changing reform. Financial sector bills and energy pricing reforms are important.”

The Executive has already given a go ahead to the proposal, with a panel of top 15 bureaucrats calling for allowing a conditional 51% FDI. In fact, DIPP officials are ready to release a cabinet note at 24 hours notice. But that cannot be done, unless they are given the go ahead from the political bosses of UPA II.

Source : moneycontrol.com