Furore over FDI makes retailers cautious

Facing opposition, the government has deferred its decision

to allow Foreign Direct Investment in multi brand retail. This backtracking has come about because MPs are not fully supporting the decision and because of forthcoming elections in UP and Punjab, where the FDI policy measure could have adverse consequences. Most the political parties are against letting FDI into Indian retail and are demanding a complete roll-back of the policy.

Retail companies are taking a wait and watch approach till the political feud over FDI is sorted out. Keeping the current situation in mind, retail big-wigs have instructed their employees to take prior permission before speaking out on the issue to the media.

While it is mandatory to seek permission before expressing any opinion related to company matters, retailers are going a step ahead by re-issuing the mandate to their employees after political parties raised their voice against the FDI.

India’s largest home-grown retailer, Future Group, and another retail giant Bharti-Walmart have sent out emails to their employees asking them to avoid any media interaction related to policy issues including FDI norms in retail and their own expansion plans, as an official notification from the government on the new policy was pending.

Walmart and Future Group were the two among many other companies, who had appreciated and applauded the cabinet’s decision to allow foreign retailers to set up stores in the country last Thursday. But since the political uproar is growing louder over the last few days, retail companies have decided to keep mum about the issue.

UK-based retailer Tesco that operates in the wholesale segment in India through a franchise arrangement with Tata group led Star Bazaar stores and French retailer Carrefour, which is looking to set up front end retail stores in India for many years now are waiting for the FDI issue to get sorted. About 12 states are opposed to the cabinet decision since they fear that entry of global retail giants will kill small neighbourhood stores and traders doing business in the country’s $450 billion retail market.

Meanwhile, both houses of Parliament were adjourned even today following protests by opposition members against the decision to permit foreign investment in retail. This is the fourth consecutive day of logjam in parliament this week over the FDI issue.