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India Suspends International Retail Plan

(Filed Under Financial and General Interest News). After introducing a plan that would allow foreign retailers to open and expand in the country, India’s governing Congress Party announced that the plan was being suspended.

If implemented, the plan would have allowed for foreign companies to own up to 51 percent of multibrand stores — supermarket or department store locations — in India, while single-brand retail companies could own up to 100 percent of their stores, up from the country’s previous cap of 51 percent.

The plan was not without provisions. Both multibrand and single-brand foreign retailers would be required to source approximately a third of their goods from suppliers within India, and the companies would only be allowed to open in the 53 Indian cities that have a population of over 1 million people. Additionally, multibrand retail operations would need a minimum investment of $100 million before being allowed to open.

Resistance from Indian small businesses, including suppliers, traders and shop owners, reportedly led to the executive decision to suspend the plan. However, opinion polls conducted by Bloomberg News indicate that India’s growing middle class is in favor of foreign retail investment with the goal of decreasing the inflation level and simply expanding retail options. There has been a consumer-based movement to get the Congress Party to reverse the suspension.

more Financial and General Interest News >>

Published 12-12-2011 by Katherine Rautenberg

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