FDI decision on hold: Mamata

India’s government has put on hold plans to open the nation’s huge retail sector to global competition that have paralysed parliament, a key ally of the ruling coalition said yesterday. The move to allow foreign investment by Wal-Mart and other supermarket giants in India’s estimated $470bn retail industry was the first big reform to be announced since the government began its second term in 2009. “(Finance Minister) Pranab Mukherjee has informed me that the government is suspending the FDI issue until a consensus is evolved,” West Bengal Chief Minister Mamata Banerjee said. Banerjee’s Trinamul Congress Party is the biggest partner of the Congress coalition and key to its survival in parliament. However, TV channels quoted government sources as saying that Prime Minister Manmohan Singh’s Congress Party-led coalition was not abandoning its liberalisation move but would seek broad agreement before proceeding. Anger over the reforms announced last month has united shopkeepers, trade unions, influential state leaders and lawmakers from opposition parties and from within Singh’s coalition. The Trinamool Congress had objected to the government allowing international supermarkets into India, saying the move would swamp small family-owned stores which dominate the country’s retail landscape and throw people out of work. Banerjee has previously pledged not to use the issue to bring down the government, and refrained from saying that consensus was impossible. “(Mukherjee) has told me that the centre has decided to suspend implementation of the decision to allow FDI in retail,” Banerjee told reporters in Kolkata in a press conference broadcast on local television. “He has told me that the decision will not be implemented unless there is consensus on the issue,” said Banerjee. Describing it as a “big step”, she said: “The issue is now over. The issue is settled. It’s a pro-people decision.”The retail sector is India’s second-largest employer after agriculture. Television reports quoted Banerjee as saying an announcement on the government’s intentions in the retail sector could come next Wednesday when parliament resumes sitting after a break. “The (Congress) party welcomes all meaningful efforts to break the stalemate. In such a situation, a broad consensus is required,” Congress general secretary Janardan Dwivedi told CNN-IBN network late yesterday. It was not immediately clear what the postponement would entail or whether negotiations were continuing. In India’s multi-party democracy, major parties are often forced to rely on fickle coalition allies, who often use the importance of their votes in New Delhi to negotiate concessions or support for the regions or states they represent. Possible dilution of the policy could include lowering the 51% foreign investment permitted under the current rules, or increasing the percentage of products to be sourced locally, or the amount firms must spend on developing infrastructure.With a thin parliamentary majority, the government is dependent on allies but does not face any immediate threat of losing power. Trinamul’s votes would be required to bring the policy into law. Any retreat on the policy would be seen damaging India’s image with foreign investors as Asia’s third-largest economy shows signs of slowing, and would add to a basket of key economic reforms that have been shelved by Singh’s government. The retail furore has hamstrung parliament, threatening to derail the government’s legislative plans for the session including bills to broaden food subsidies as well as key anti-corruption legislation.