Just days after we reported the Government decision to open up Indian retail to foreign companies the Indian Government has "suspended" its decision in the face of concerted opposition to the prospect of foreign supermarket chains entering the market. This included street protests, uproar in Parliament and a retail strike.
However, opportunities could still exist. At present the Congress Party has not terminated the executive order relating to foreign investment – rather they have suspended its implementation. The Government still appears intent on moving forward, but only after reaching a consensus with all political parties. Based on current opposition it appears that consensus will be hard to reach on supermarkets, but may be less so on single brand retail, which could lead to significant opportunities for single brand retailers.
The outcome remains unclear, but the proposed reforms are a signal of an attitude change. Prime Minister Singh has a track record of modernising India's economies, but his Government relies on support from other parties.
In some countries this decision would be tumultuous, but in India passion runs high in retail.