India’s commerce minister said Friday that the decision to open the country’s $400 billion retail sector to global chains such as Wal-Mart has a built-in safety net for small shops and farmers.
Anand Sharma told reporters that the Indian cabinet’s decision late Thursday allowing 51 percent foreign ownership of supermarkets would vastly improve decrepit infrastructure that causes massive food waste in a country plagued by malnutrition and high inflation.
Sharma said the new rule would only apply in cities with more than one million people. The minimum investment would be $100 million and half of this would have to be invested in rural infrastructure and refrigerated transport and storage. Thirty percent of the produce sourced by the retailer would also have to come from small and medium enterprises.
Top retailers such as Wal-Mart and Tesco have lobbied for years for a chance to build stores in the nation of 1.2 billion people and political deadlock on long-promised reforms in retail and other areas has helped cool foreign investor interest in India. Foreign retailers have Indian partners in wholesale operations, but no retail stores.
The Cabinet also allowed 100 percent foreign ownership of single-brand retail operations, up from 51 percent.
Advocates see the move as a way to strengthen India’s creaking food distribution system.
The country suffers chronically high malnutrition and soaring inflation, but it’s not for lack of food. It is the world’s second largest grower of fresh produce, yet loses an estimated 40 percent of fruit and vegetables to rot because of a lack of refrigerated trucking and warehouses, poor roads, inclement weather and corruption. That translates into lower incomes for farmers and higher prices for consumers.
If companies like Wal-Mart and Tesco can open shops of their own, the investments they make in improving farming techniques and getting produce into stores more efficiently, could bring down food inflation and possibly improving rural incomes.
Sharma said the policy would have a “multiplier effect” and tens of millions of people would gain jobs.
Analysts say India’s darkening economic prospects gave fresh urgency to the decade-long talks on opening up India’s retail sector. Many see Thursday’s move as an attempt by the ruling Congress Party to reassert its leadership, which has been weakened by corruption scandals, soaring inflation and slowing growth.
“When the government’s credibility seems to be under significant question, this is one way to give a message that the government is still in business and it means business,” said Arvind Singhal, chairman of retail consultancy Technopak Advisors.
The cabinet this month also indicated that it is open to allowing 26 percent foreign investment in pension fund management _ another headline item in the Congress Party’s promised second wave of economic reforms, which follow a round of liberalization forced by a balance of payments crisis in the early 1990s.
The central bank has raised interest rates by 5.25 percentage points over the last 18 months but that hasn’t been enough to control runaway inflation or the rupee’s freefall. Food inflation, which quickly becomes a political issue in India, has been bouncing into the double digits since 2008 and now stands at 9.1 percent.
“Monetary policy interventions have not been able to control inflation,” Singhal said. “Now they have to look into supply side policy, which could have an impact.”
International investors, who have grown increasingly wary of corruption, surprise tax bills and shifting regulations in India, have also put pressure on the government to make good on old promises to grant them greater access.
Rajan Bharti Mittal, vice chairman and managing director of Bharti Enterprises, said Friday that the retail move was a “major landmark in India’s economic reforms process.”
Bharti’s joint venture with Wal-Mart has 13 wholesale outlets in India and sources produce from thousands of farmers.
“We have always stated that development of organized retail in India will bring immense benefits across the value chain _ from farmers to small manufacturers and above all to consumers, while creating enormous employment opportunities at the bottom of the pyramid,” Mittal said in a statement.
Wal-Mart, British-based Tesco PLC and French-based retailer Carrefour welcomed the decision.
“This legal evolution should contribute to modernize the Indian food supply chain and to fight against food inflation for the benefit of Indian customers,” Carrefour said in a statement.
The change, which does not require approval by India’s fractious Parliament, was opposed by the Trinamool Congress Party, a key partner in the ruling coalition, and the main opposition BJP party. The country has struggled to find consensus because of concerns that competition from the foreign retail giants could hurt millions of small shopkeepers, as well as the poor.
Sharma said the new policy had been reached through a “transparent and democratic process of consultation with all the stake holders.”
India’s $400 billion retail sector is the nation’s second-largest employer, after agriculture, according to consulting firm Deloitte.
Ashish Sanyal, managing director of retailing consultancy AMP Retail Services, said small businesses had nothing to fear from the big chains.
“At the end of the day this is like the high tide. All boats will rise. We will learn from the big retailers,” he said.
Forecasters say Hurricane Kenneth is weakening rapidly and has been downgraded to a Category 1 storm in the eastern Pacific.
There is no threat to land from what had been the strongest late-season hurricane in that area on record when it earlier reached Category 4 status.
The U.S. National Hurricane Center in Miami said Wednesday that Kenneth has maximum sustained winds near 90 mph (150 kph). The storm was centered about 860 miles (1,385 kilometers) southwest of the southern tip of Baja California, Mexico.
It is moving west at 9 mph (15 kph)
Kenneth is expected to weaken further and could be downgraded to a tropical storm by Thursday. There are no coastal watches or warnings in effect.
The eastern Pacific hurricane season ends Nov. 30.
Efforts to clean up areas near Bangkok that were flooded as much as a yard (meter) deep just two weeks ago are gaining pace as the threat of inundation of the Thai capital eases.
Hundreds of volunteers joined monks in gathering flood detritus into garbage bags Tuesday near the massive temple that houses the Dhammakaya Buddhist sect in Pathum Thani province, just north of Bangkok.
Businesses in unaffected parts of central Bangkok are removing their sandbag barriers as it becomes clear that floodwaters have been diverted east and west of the center of the city low fee cash advance.
Since July, more than a fifth of the country’s 64 million people have been affected by the worst flooding in more than 50 years, leaving at least 606 people dead.
Here’s a look at some major retailers’ layaway programs:
Toys R Us
TransCanada Corp. is still likely to proceed with the Keystone XL pipeline project, despite the roadblock thrown up by the U.S., says analyst Steven Paget.
Paget, of FirstEnergy Capital in Calgary, said that re-routing the pipeline through Nebraska may drive up the $7 billion cost by $1 billion.
The U.S. has ordered a re-routing in order to avoid the sensitive Sandhills grasslands in Nebraska.
The delay will push any construction start past next year
Italy’s benchmark 10-year borrowing rate has jumped above the 7 percent level widely considered unsustainable over the longer term, a day after Italian Premier Silvio Berlusconi announced he would resign after Parliament passes new austerity measures.
The announcement failed to calm markets, with stocks and bonds sliding.
The 7 percent threshold is psychologically important for traders because Greece, Ireland and Portugal asked for bailouts when it became clear the rate wasn’t coming back down from that level.
Berlusconi agreed to leave office after a routine vote confirmed he’d lost his majority in Parliament. What comes next remains unclear.
Berlusconi wants new elections with his hand-picked successor as a candidate. Before that can happen, Italy’s president must decide an interim government and if it will be led by politicians or technocrats.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.
ROME (AP) _ Italian Premier Silvio Berlusconi confirmed he won’t run again for office and said Wednesday his hand-picked successor Angelino Alfano will be his party’s candidate when Italy holds new elections.
Italian borrowing costs jumped higher a day after Berlusconi promised to resign after Parliament passes new austerity and reform measures. While Berlusconi’s majority was hampered in pushing through reforms, the makeup of Italy’s next government remains a looming question.
Berlusconi said he would leave office after a routine vote in Parliament revealed he no longer had the majority he needs to push through policy. He said he would step aside once Parliament passes economic reforms demanded by the European Union to prevent Italy from being swept up further into Europe’s debt crisis.
No date has been set, but earlier indications suggested it would happen next week.
Despite the move, Italy’s financial markets deteriorated on Wednesday. The yield on Italy’s 10-year bonds jumped another 0.37 of a percentage point Tuesday to 6.95 percent. The main Milan stock index was trading 3.6 percent lower at 15,097. Shares in Berlusconi’s Mediaset empire were battered, trading down 9.8 percent at euro2.262.
Once Berlusconi resigns, President Giorgio Napolitano must begin consultations to form a new government _ possibly with the conservative leader from Berlusconi’s party, or if consensus can’t be reached, a technical government may be sought.
Berlusconi is pressing for new elections in early 2012.
“I won’t run, actually I feel liberated,” Berlusconi was quoted as telling the La Stampa daily. “It’s Alfano’s turn.”
Berlusconi tapped Alfano, his former justice minister, to head his People of Liberties Party a few months ago. At 41, Alfano represents a new generation of politicians after 17 years of Berlusconi leadership.
Mario Monti, a former EU competition commissioner who now heads Milan’s prestigious Bocconi University, has been widely tipped as a candidate to head a technical government.
Berlusconi conceded it was up to Napolitano to decide how to proceed once he steps down.
It’s not clear that Napolitano would want to subject Italy to elections any time soon given the need to calm markets. He may try to sound out politicians about the possibility of forming either a government of technocrats or a broad-based government that could hold a majority in parliament.
Mining company Anglo American has gained a controlling interest in diamond miner De Beers, paying $5.1 billion for the 40 percent of De Beers shares held by the Oppenheimer family.
The deal potentially raises Anglo American’s stake to 85 percent. The government of Botswana, however, has pre-emption rights to buy one-fourth of the Oppenheimer shares at the time the transaction closes, potentially increasing its stake to up to 25 percent.
“This has been a momentous and difficult decision as my family has been in the diamond industry for more than 100 years and part of De Beers for over 80 years,” said Nicky Oppenheimer, representing the Oppenheimer family interests which are held by CHL Group.
Anglo American shares were up 3.4 percent in midmorning trading in London.
Federal Reserve Chairman Ben Bernanke acknowledges the pace of economic growth is likely to be “frustratingly slow,” after the Fed downgraded its forecast for the next two years.
Bernanke says the central bank is looking for economic activity and labor market conditions to improve gradually over the next two years, but at a sluggish pace.
Bernanke cited the debt crisis in Europe as a particular concern. He says that could have adverse effects on confidence and growth. He says the Fed is closely monitoring the situation.
It was Bernanke’s third news conference this year, a practice he started in April in an effort to provide more background on the Fed’s actions and its thinking behind its latest economic forecast.
Olin Corp., an ammunition and chemicals maker based in Clayton, reported third-quarter profit of $47.2 million, or 58 cents per share, compared with $31.8 million, or 40 cents, in the corresponding period of 2010. Sales rose to $550.2 million from $432.8 million. Results included pretax restructuring charges of $4.1 million associated with converting the Charleston, Tenn credit score., chlor alkali plant to membrane technology and moving Winchester centerfire ammunition manufacturing from East Alton to Oxford, Miss.
The nation’s second-largest cable company, Time Warner Cable, says its third-quarter earnings slipped 1 percent even as its revenue rose.
Time Warner Cable Inc. said Thursday that its net income fell to $356 million, or $1.08 per share. That’s down from $360 million, or $1 per share, in the same period a year earlier.
Revenue grew 4 percent to $4.91 billion from $4.73 billion.
Analysts polled by FactSet were expecting earnings of $1.13 per share on revenue of $4.95 billion.
Time Warner Cable says its residential services revenue climbed 2 percent to $4.3 billion. Business services revenue jumped 35 percent to $387 million. A growth in the number of high-speed data subscribers helped boost results.
Advertising revenue fell 3 percent to $216 million.
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