Osborne urged the Indian government to be more ambitious in retail liberalization. The government is keen to revive the decision to allow 51% FDI in the multi-brand retail to boost sentiment and attract foreign investment. Protest has been raised by some political parties, including the Samajwadi Party, which provides outside support to the central government.
Samajwadi Party chief Mulayam Singh Yadav and senior Communist Party leaders, including CPI(M) general secretary Prakash Karat, have urged PM Manmohan Singh not to proceed with the decision to allow FDI in the multi-brand retail. BJP also opposed FDI in multi-brand retail.
The government has held several rounds of discussions with key stakeholders including state chief ministers to get their support for the controversial decision. A view has emerged that the decision of implement the decision would rest with the states and those states that want to implement the decision can go ahead with. The UPA government had to put on hold its decision to allow FDI in the sector after stiff opposition from political parties, including its ally Trinamool Congress.
Bihar chief minister Nitish Kumar has opposed foreign direct investment in retail, dealing a body blow to the Centre’s hopes of cobbling together a consensus on allowing global giants such as Wal-Mart and Carrefour to set up multi-brand stores in India.
After the rejection by the SP and Left, the Congress is now isolated on the issue. Kumar’s rebuff will test its willingness to be seen as the sole mover of a reforms measure opposed by traders—a very organized pressure group—besides political parties.