India defends foreign investment stance, despite protests and strikes.

NEW DELHI: Despite ongoing unrest in India over the government’s push toward opening up Foreign Direct Investment (FDI) in the country and a recent increase in diesel prices, Prime Minister Manmohan Singh defended New Delhi’s policy and argued it would help boost the country’s economy.

“We are at a point where we can reverse the slowdown in our growth. We need a revival in investor confidence domestically and globally. The decisions we have taken recently are necessary for this purpose,” he said.

India’s gross domestic product (GDP) for the first quarter (April-June) slipped to 5.5 percent from 8 percent for the same quarter last year.

In his speech to the country after the government’s policy measures resulted in a nationwide strike, the PM said that in 1991, when India opened the manufacturing sector for foreign investment, “many were worried, but today, Indian companies are competing effectively both at home and abroad, and they are also investing around the world.”

Still, anger is growing in India as the country began a nationwide strike on Thursday as workers protested the government’s announcement that it would open up the multi-brand retail sector to foreign investors as well as the recent price hikes in diesel fuel.

“This is unacceptable that the government is to allow companies to have their own stores in India without partnering with local brands,” said Amrit Tarnidna in Delhi. The former retail manager at a shop that carried Nike, Reebok and other western products believes the move will reduce jobs for Indians.

“I am joining the strike because these moves will only hurt the local Indian worker,” he told Bikyamasr.com.

The day-long “Bandh,” or strike, on Thursday, led by the main opposition party, Bharatiya Janata Party (BJP) and its allies has already seen it affecting some of the opposition ruled states such as Karnataka, leaving the capital Bangalore in a near standstill.

On Tuesday, key all of the ruling coalition, Trinamool Congress party, pulled out from the alliance as a show its protest.

In Bangalore, India’s main technology hub, streets were almost completely deserted as train services were disturbed and shops were closed.

One resident told Bikyamasr.com that “we are all Indians and we are not going to let the government dictate what we don’t approve of.”

In Delhi, although majority of shops were shut for the day, the transportation system was working as normal with ricksaws and taxis taking passengers to their destinations. The metro was also not affected.

India’s financial capital, Mumbai saw little response as train, buses and taxis are operating as normal.

However, Bombay Stock Exchange’s benchmark Sensex on Thursday fell by over 204 points in early trade as funds and retail investors trimmed positions due to political crisis following Trinamool Congress, a key government ally, decision to withdraw its support to the government, the Press Trust of India report.

The stock market was closed on Wednesday for “Ganesh Chaturthi” — a Hindu festival celebrated on the occasion of birthday of Lord Ganesha.

Last Friday, the Indian government made some drastic changes in its Foreign Direct Investment (FDI) policy to revive its ailing economy and restore investors’ confidence in the country.

Among others, is to allow 51 percent FDI in multi-brand retail trading, but state governments are given the choice to take it up or otherwise.

A minimum investment of US$100 million has been set, half of which necessarily has to be in creating storage and warehousing facilities in rural areas, Ministry of Commerce and Industry said in a statement.

Source : bikyamasr.com