India's FDI retail policy suspension : set back to market reforms

Abstract

After two years of deliberation the Indian cabinet announced at the end of November that it would allow foreign direct investment (FDI) into its domestic retail sector. Specifically, this proposal would have allowed 51 percent foreign investment into multi-brand retailing from outlets such as Wal-Mart and Tesco, and 100 percent FDI ownership by single-brand stores such as Apple and Nike. Howls of protest within India has just led the Indian government, mere days after its initial decision, to suspend the market opening in retail. Pravakar Sahoo, Associate Professor at the Institute of Economic Growth, New Delhi, and recently a South Asia Visiting Fellow at the East-West Center in Washington, explains that the suspension of this decision is "a blow to market reforms in India and for investors interested in the Indian economy."