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Parliament debates opening of retail market

Debate heats up over Indian government's decision to open the retail sector to foreign supermarket brands such as Walmart and Carrefour.

NEW DELHI // A heated debate began in the Indian parliament yesterday about the government's decision to open the retail sector to foreign supermarket brands such as Walmart and Carrefour.

The boisterous arguments - which will be followed a vote today - came after several days of negotiation between the government and opposition that had paralysed parliament over opposition to the foreign direct investment (FDI) bill.

While the decision to allow the retail outfits to operate in India does not require parliamentary approval to become law, the vote will be a test of staying power for the Congress-led coalition, which is under pressure to rescind a policy opponents say will destroy the livelihoods of farmers and small business owners.

Sushma Swaraj, the leader of the opposition in the lower house and a member of Bharatiya Janata Party (BJP), yesterday said the bill would allow foreign companies to control the supply of and demand for food and introduce predatory pricing.

"At first, they will introduce such low prices that will finish the rest of the market," she said. "Then, when the customer has no other choice, they will keep hiking prices and looting the people."

The government of the prime minister, Manmohan Singh, which made the decision in September to allow foreign companies to invest up to 51 per cent in domestic supermarkets, argues the reforms are needed to revive an economy that will this year record its slowest pace of growth for the past 10 years.

Yesterday, Ms Swaraj pledged to shore up support from political parties opposed to the bill. "If the government does not take the decision back, then I appeal to my colleagues here: vote with us and defeat FDI," she said.

Under the law, international supermarket chains such as Tesco would be allowed to operate in cities with a population of more than 1 million, although individual states can deny them entry. There are 53 cities of sufficient size in India but only 18 of them will be a part of the first phase - most of them in Congress-governed states.

"If there are states that don't want to implement FDI in retail, let them not," said Kapil Sibal, the minister of communications and information technology. "There were certain states who were opposed to the idea, so we gave them the freedom to choose to stay away from it."

Saugata Roy, a member of the Trinamool Congress, yesterday compared the arrival of Walmart in India to rise of the British East India Company, which arrived in the 18th century and led to a trade monopoly and the colonial expansion of the British Empire that only ended in 1947.

"America coming, through Walmart, will be the like a repeat of East India Company entering India," he said.

The Congress-led ruling alliance is up to 12 seats short of a majority in the lower house, and will need two key groups outside the coalition to at least abstain if it is to win a majority.

In the upper house, it faces an even tougher battle.


* With additional reporting by Bloomberg News

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