Wal-Mart's India operations have been stalled due to sourcing restrictions, but the world's largest retailer has got no reassurance from the government with the ruling Congress declaring: "If Wal-Mart goes, other 'marts' will come."
"Why should the government think about it? The government has not made the policy for one business house. It's a national policy in an open world. If Walmart has gone, more marts are there, they will come" Congress spokesperson Raj Babbar said, after Wal-Mart said it could not meet a key norm in the multi-brand segment that requires 30 per cent sourcing from small industries. Wal-Mart said it can procure only about 20 per cent.
The Congress response underscored concerns expressed by global retailers on India's sourcing restrictions in multi-brand retail - concerns that also figured in talks during US Vice President Joe Biden's New Delhi meetings.
Mr Biden's delegation pushed for simpler rules to make it easier for foreign firms to open shop in India. The Vice-President, in his meeting with Prime Minister Manmohan Singh, was also reported to have flagged the issue.
Although the government has permitted 51 per cent FDI in multi-brand retail about ten months back, no formal proposal has been received by the Department of Industrial Policy and Promotion yet.
But on Tuesday, an important signal came from political parties across the spectrum, including parties that have fiercely opposed FDI in multi-brand retail. No party pushed for scrapping FDI in multi-brand retail.
The Parliamentary Standing Panel on Trade and Industry, which includes members from the BJP, Left and the Trinamool - which had walked out of the UPA coalition in protest against FDI - recommended a regulator to protect the interests of retailers.
The lack of political opposition to FDI may be a big confidence boost for the industry, but a regulator could also mean increased bureaucracy for foreign investors to overcome.