India Abandons Foreign Retailers

India (NYSE:IFN) once again dithered over foreign participation in its retail industry (NYSEARCA:XRT). This time, retailers lost.

The government announced on Nov. 24 that foreign companies could own 51 percent of supermarkets in major cities and 100 percent of single-brand stores. Though the cabinet’s decision was hailed by India’s business leaders, the opposition parties went on the war path in protest. They claim the move would mark the end of mom-and-pop stores in the country.

Protests led to a virtual halt in parliamentary business and caused the government to finally call an all-party meeting for reaching a consensus.

The result: a suspension of the retail announcement. The fallout: claims of a major victory by the opposition and a government that once again paints a picture of not being in control.

“This is a signal that this government can’t do anything with force,” said Ashok Gulati, chairman of the Commission for Agricultural Costs and Prices in the Ministry of Agriculture. “It’s the nation that loses.”

“What is lacking today is urgency in terms of implementation of forward-looking economic policies talked about during times of election,” said R. Rajagopal, head of advisory for India’s Kotak Mahindra Bank in Singapore. The foreign investment plan “could have indicated that the government has come out of the logjam in economic reforms. Unfortunately we’ll have to wait some time.”