India Clears A Path To Bring In Big-Box Retailers The plan by Prime Minister Manmohan Singh's governing coalition would let foreign supermarkets operate in Asia's third-largest economy. But two days of verbal sparring leading up to the lower house vote revealed deep suspicions about bringing global chains like Wal-Mart to a land of mom-and-pop stores.
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India Clears A Path To Bring In Big-Box Retailers

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India Clears A Path To Bring In Big-Box Retailers

India Clears A Path To Bring In Big-Box Retailers

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It's MORNING EDITION from NPR News. Good morning. I'm David Greene.


And I'm Renee Montagne.

Wal-Mart stirred controversy for years as it moved into America's towns and drove out small businesses. Now that fight has moved to India, where the parliament has been hotly debating whether to liberalize India's massive retail sector. The lower house today endorsed government plans to invite in big box international retailers such as Wal-Mart. But as NPR's Julie McCarthy reports from New Delhi, deep suspicions remain in parliament and elsewhere in a land of mom and pop stores.

JULIE MCCARTHY, BYLINE: For two days running, India's political opposition let loose a full-throated assault on big-name retailers like Wal-Marts looking to capitalize on India's rising middle class consumers. The impassioned proceeding veered more toward a shouting match than a parliamentary debate.


MCCARTHY: Such is the heat that multinational retail chains generate in India, where push-cart vendors, hole-in-the-wall shops and small family-owned corner stores known as kiranas are king. They make up 98 percent of India's estimated $450 billion retail sector.

The new measure, billed as part of the biggest economic reform in two decades, would clear the way for multi-brand retailers. Foreign supermarket chains like Wal-Mart and Tesco from the U.K. could open up stores and own 51 percent interest. Until now, Wal-Mart has operated in India but as a minority partner with a local company.

With the Indian economy slowing, the central government is under pressure. Bringing in big foreign names like Wal-Mart would attract investment, create jobs, and improve the country's infrastructure that lags behind China's. That's the government's theory. But the leader of the political opposition BJP Party, Sushma Swaraj, wasn't buying it.

SUSHMA SWARAJ: (Foreign language spoken)

MCCARTHY: The big retailers are resorting to predatory pricing, she said, arguing that foreign investment in retail would destroy small retailers and take away jobs. All around the world, she said, large supermarkets tend to reap high profits but pay low wages. She says farmers would also be exploited. I'd like to ask Wal-Mart and Tesco: Would you buy from farmers directly?

She said that the Indian middlemen employed by the millions in India's food supply chain today would be replaced by international middlemen. The opposition leader warned Prime Minister Manmohan Singh, who sat expressionless through the raucous debate, that he's better off fighting for the rights of his own people than the rights of multinationals.

SWARAJ: Fight for the poor and not for the rich. Fight for the small and not for the big. Fight for the country and not for the multinationals.


MCCARTHY: The anti-corporate rhetoric lit up Twitter with praise, but also managed to twist a few facts. Like the claim that McDonalds imported potatoes for its fries because Indians weren't good enough. Not true, McDonald's said, and proudly proclaimed that farmers in Gujarat provide their spuds.

In response to the opposition, Kapil Sibal, the telecommunications minister, pointed out that the BJP had also proposed direct investment in retail when they were power in 2004, but now changed their minds. Sibal noted that foreign direct investment in India, which totaled $47 billion last year, provides jobs for the country's young.

KAPIL SIBAL: They can take India forward and that's how we make our policies. We don't make our policies basis on whether we are sitting on this side or that side but what we can do for the people of this country.

MCCARTHY: Big name retailers would affect a fraction of India's retail sector, says economist Ashok Gulati, who chairs the Commission on Agricultural Costs and Prices. And while opening up is fraught with tensions, Gulati says it cannot be delayed.

ASHOK GULATI: Modern retail is an idea whose time has come and nobody can stop it in South Asia. And this is the way the system is going to go. The wisdom lies in recognizing this and giving it an Indian signature.

MCCARTHY: A signature that Gulati says not only spurs competition in India's vast market but also inclusiveness.

Julie McCarthy, NPR News, New Delhi.

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