In her remarks at the India-US Strategic Dialogue, the US secretary of state Hillary Clinton emphasized the need for a hospitable bilateral investment environment. "We look forward to working to advance negotiations on the bilateral investment treaty, to further reduce barriers to trade and investment in areas like multi-brand retail, and to create hospitable environments for each of our companies to do business in the other's country," she reportedly said on Tuesday.
However despite the Indian side assuring the US businesses of a level playing field and total transparency; and despite the Indian External Affairs Minister S.M. Krishna inviting them to take advantage of enormous business opportunities offered by India's plans to invest over a trillion dollars in infrastructure development, there was no mention of the FDI in the joint press conference on Wednesday after the India-US strategic dialogue.
The scam ridden coalition government limping towards the general elections in 2014 after a series of delayed decisions had announced 51% FDI in the multiple brand retail sector but immediately put it on hold due to opposition from its allies including Trinamool Congress. The government has already allowed 100% FDI in single-brand retail.
According to media sources, The Department of Industrial Policy and Promotion has started wider consultations with farmers, consumers and the food processing industry on the issue to get them on its side. India's multi-brand retail segment, estimated at $600 billion, is dominated by small kirana (mom & pop) stores. The Opposition parties assert that allowing global retailers in multi-brand retail would lead to job losses in the unorganized sector.
With the general elections around the corner, and with the government caught on the wrong foot, the absence of FDI issue in the joint statement indicates that the government still has reservations and limitations to enforce the policy it announced, only to be place on the black burner.
US-based Wal-Mart and France's Carrefour are among the global retail giants that are keen on entering the lucrative Indian market and have anyway entered the market in back office operations with Bharti and on a cash and carry business, respectively but have ambitious plans of expansion and play a major role in this section.
Wal-Mart Reviews Bribe Policy
In the meanwhile, US-based Wal-Mart which is often accused of its misuse of power and high handedness that includes bribing, said on Wednesday that it was tightening anti-corruption practices in India, amidst reports of US lawmakers asking the retail giant to review its operations in the country along with those in four other nations.
Foreign Corrupt Practices Act of the US bars bribes to officials of foreign governments. Wal-Mart is reportedly conducting an internal investigating into bribery involving its Mexican operations, and is carrying out a global review of its anti-corruption compliance program. It has, however not provided details about the review.
The way things stand it is unlikely that the Indian government will change its official standÂ during the coming months- if at all before the election. Of course, the US will continue to put pressure from various sources directly and indirectly.
(Source: Media Reports)