Sonia sounds alarm on India foreign retail entry

INDIA: Ruling Congress party chief Sonia Gandhi has sounded the alarm over fears that letting giant foreign retailers into India could drive small "mom-and-pop" stores out of business, reports said Tuesday.

In a letter to Congress Prime Minister Manmohan Singh, Gandhi called for the government to "consider having the relevant issues properly examined before further decisions."

The reports of the letter came after Wal-Mart, the world's largest retailer, teamed up late last year with India's Bharti Enterprises, the nation's top private phone firm, to start a nationwide store chain.

To counter weakening domestic sales, retailers like Wal-Mart, France's Carrefour, Germany's Metro and Britain's Tesco have been pushing to enter India's 300-billion dollar retail industry in what commentators have dubbed the "great Indian retail gold rush".

Gandhi was quoted by the Times of India as saying that she had "received suggestions from many quarters about the desirability to first study the possible impact of transnational supermarkets on the livelihood security of those engaged in small-scale operations."

The Congress chief, who turned down the job of prime minister when the party won office in 2004, is widely seen as the political power behind the throne.

The government still bans foreign retail chains from selling directly to consumers but they are using a backdoor to enter the market by starting wholesale and sourcing firms which supply a local retail partner. India's 15-million dusty, chaotic and cramped corner outlets fear that competition from the giant retailers, with their air-conditioned stores and plastic-wrapped produce, will drive them out of business.

There was no immediate comment from Congress or the prime minister's office on the reports which come amid a media flurry that the government will liberalise foreign investment in the retail sector in the coming months.

Last week, India's trade minister Kamal Nath said Carrefour, the world's second biggest retailer, was in talks with India's Wadia group to clinch a deal to enter India, according to media reports.

New Delhi, Tuesday, AFP