New Delhi, India Finance Minister Pranab Mukherjee said he lacks support from lawmakers to allow more foreign investment in retail and insurance, stymieing Carrefour SA and Wal-Mart’s expansion in India, according to a report by Bloomberg.
“We haven’t reached the magic number” in parliament, Mukherjee said in an interview with Bloomberg-UTV news channel. “We are lacking in areas where legislative support is needed,” Mukherjee said, adding there is no “common approach” among allies in the ruling coalition about easing overseas investment rules.
More than three years after Wal-Mart formed a venture with billionaire Sunil Mittal, Wal-Mart has just one wholesale outlet in India and is barred from selling directly to the nation’s 1.2 billion people. Legislation to allow insurers including New York Life Insurance Co. to increase investment has been languishing for at least six years.
“India will certainly be an important market in a very long term…but its government is very protective of small businesses,” Walter Stackow, an analyst at Manning & Napier Advisors, said in a telephone interview with Bloomberg. “It will take a long, long time for the foreign retailers to get a real foothold there.”
Local Indian laws are aimed at protecting small shops. India permits overseas chains such as Carrefour and Wal-Mart to operate as wholesalers and sell groceries and other goods to businesses such as supermarkets, department stores and restaurants. They are barred from opening stores or buying stakes in supermarket chains.
Carrefour CEO Lars Olofsson said last week the retailer intends to open a wholesale outlet in India by the middle of this year. Wal-Mart’s first wholesale store started operations in May.