The American Interest
Analysis by Walter Russell Mead & Staff
Wal-Mart Coming to India?

Two months ago, Via Meadia looked at India’s plan to open up to foreign investment and wondered whether it would be bogged down interminably by politics like so many other Indian projects. Fortunately, it appears that the bill made it through the grinder on Friday, when it was announced that the reforms will be implemented, albeit on a state by state basis.

The changes will allow foreign investment (up to a certain percentage per company) in broadcasting, retail, and airline sectors, hopefully spurring India’s slowed economy, as the NYT‘s India Ink reports:

“The objective of the policy was to attract investment, create local manufacturing and employment,” said Anand Sharma, the minister for commerce and industry, during a press conference in New Delhi Friday evening, explaining the changes.

Mr. Sharma noted that the implementation of the new policy has been left entirely to the “decision and discretion” of the state governments. The government has allowed single-brand foreign retailers, like Gap or Ikea, to open stores in India that they will own 100 percent. So-called “multi-brand” retailers, or stores like Walmart or Tesco, will be allowed to open stores in India and own 51 percent of these (Walmart already has a wholesale store in India.) The government also allowed foreign airlines to purchase 49 percent of an Indian airline, and investment in broadcasting companies.

Making the reforms a state perogative rather than a national priority is a concession to those who believe that allowing Wal-Marts into India will be detrimental to the Indian way of life. Hopefully this compromise means that the reforms will last (where others did not) by allowing some regions to refuse the reforms rather than incite them to block reform altogether. Meanwhile, others can look forward to the jobs, technology, and improved management practices they believe the investment will bring.

A we’ve noted before, how India maneuvers to make changes like these will be of great importance to us all later on. We’ll be sure to keep an eye on these developments.

Published on September 14, 2012 7:00 pm