New Delhi: The euphoria over the decision to open up India`s retail trade industry to foreign companies turned into despair after the suspension of the decision Wednesday owing to political pressure from both within and outside the ruling coalition.
India Inc, which had hailed the decision taken last month as one that signals movement forward in the reforms process and one that will help farmers, consumers and small and medium enterprises, felt let down and said it also sends wrong signals overseas.
"The government decision to hold back up to 51 percent FDI in multi-brand retail and 100 percent in single brand retail is deeply disappointing," said Harsh Mariwala, president, Federation of Indian Chambers of Commerce and Industry (FICCI).
"It is a highly regressive move. For the growth of this vital sector of the economy which is likely to result in strong linkages with the farm sector and for the economy as a whole it is imperative that the reforms like these should take place," Mariwala said.
Earlier this week the Confederation of Indian Industry (CII) hoped that there will be early consensus among the political parties on the FDI in retail issue as it felt the move would be in the national interest and create jobs and benefit farmers as well as consumers.
"Holding back the cabinet decision on foreign direct investment (FDI) in retail due to political opposition is a clear case of missed opportunity that will dent the country`s image as a global investment destination," a leading industry lobby Assocham said.
"It is a clear case of missed opportunity that would have created over 10 million of new jobs in three years, curbed agricultural wastages, benefited farmers with better prices for their produce and brought down prices of many commodities for consumers."
In a decision taken on Thanksgiving Day, Thursday Nov 24, a meeting of the cabinet presided over by Prime Minister Manmohan Singh had decided to allow up to 51 percent foreign equity in multi-brand retailing and enhance the cap on single-brand format to 100 percent.
But with stiff opposition from both within the ruling United Progressive Alliance (UPA), notably the Trinamool Congress and the DMK, as also persistent logjam in parliament due to an unrelenting opposition, the decision was "suspended" pending consensus.