(Repeats story issued on Sunday)
* Landmark reform paused, govt faces wall of opposition
* Embarrassing turnaround for beleaguered govt
* Key Congress ally said govt waiting for consensus
* Reform would open $450 bln industry to global players
By Henry Foy
MUMBAI, Dec 4 India has put a plan to open
up its retail industry to foreign supermarkets on hold, a senior
government source said on Sunday, an embarrassing turnaround for
a beleaguered government fighting to retain the support of key
The move to allow global giants such as Wal-Mart
into India's $450 billion retail market, the first major
economic reform since Prime Minister Manmohan Singh's
graft-riddled term began in 2009, has been met with fierce
opposition from some who say it will destroy the livelihood of
millions of small traders.
"This is a pause," the government source with knowledge of
the matter told Reuters. "Do not see it as a rollback, as if the
government is giving up on it. This is just a small pause."
The idea appears to give the under-fire ruling party time to
gain the support of its key coalition allies.
"Parliament needs to get going again. There is so much that
the government needs to do," the source added, a day after the
government's biggest ally said the policy was being sidelined
due to disagreement within the ruling coalition.
Any postponement or watering down of the policy would be a
huge embarrassment for Singh's government, which has failed to
pass any big-ticket economic reforms as it struggles with
allegations of widespread graft.
Singh has lost much of his credibility as the reformer who
turned India from near-bankruptcy 20 years ago to an economic
wonder. Foreign investors are seen spooked by a growing sense of
policy paralysis that Asia's third-largest economy can
ill-afford as once-booming GDP growth begins to temper.
The government was likely to release an official statement
regarding the issue on Monday, said the source, who was not
permitted to speak to the media.
Allowing foreign direct investment into a retail industry
dominated by small shops was trumpeted by Congress as a policy
that would help ease stubbornly high inflation, improve
supply-chain infrastructure, and create millions of jobs.
The main opposition Bharatiya Janata Party has led protests
against the reform in parliament that have paralysed both
chambers every day since the 21-day winter session opened last
"JUST INDIAN POLITICS"
Mamata Banerjee, the firebrand leader of the Congress
party's biggest ally and a opponent of the policy, said on
Saturday the government had told her the plans would be put on
hold until a consensus had been reached.
Her West Bengal-based Trinamool Congress brings 19 votes to
Singh's coalition, which relies on allies to hold a wafer-thin
majority in New Delhi.
Ruling parties in India's colourful democracy are often
forced to rely on fickle allies, who can use the importance of
their votes in the national parliament to negotiate concessions
or support for the regions or states they represent.
"This is just Indian politics," the source said.
"Parliament is being stalled by an issue that only a few
months ago everyone was in agreement with."
The controversy comes as the ruling party fights to fend off
criticism that it has failed to tackle high prices and maintain
high economic growth -- and as key state elections loom next
year and a general election beckons in 2014.
Possible dilution of the policy could include lowering the
51 percent foreign investment permitted under the current rules,
increasing the percentage of products to be sourced locally, or
the amount firms must spend on developing infrastructure.
"We have acted out of conviction and carefully thought it
through," Trade Minister Anand Sharma told CNN-IBN TV channel on
Sunday in an interview recorded before Banerjee's announcement.
"We will talk with our allies," he added, stressing that the
policy would not be abandoned.
Singh this week rejected calls to roll back the policy amid
chaotic scenes in parliament as opposition lawmakers chanted
slogans and held up placards denouncing the measure as a
The reform, as it was first presented, would allow global
chains like Wal-Mart, Tesco Plc and Carrefour
to own up to 51 percent of retail ventures and allow foreign
firms to fully own single-brand retail operations.
(Editing by Nick Macfie and Yoko Nishikawa)