Bloomberg News

GE Finds India ‘Frustrating’ After Singh Stalls Wal-Mart Policy

December 09, 2011

Dec. 7 (Bloomberg) -- Policy decisions in India are fraught with “uncertainty and confusion,” resulting in frustration for businesses operating in the country, John Flannery, chief executive officer for General Electric Co.’s local unit, said.

Opposition parties and allies of Prime Minister Manmohan Singh this week forced him to suspend a decision he made Nov. 24 that would’ve allowed retailers such as Wal-Mart Stores Inc., Carrefour SA and Tesco Plc to open supermarkets in the world’s second-most populous nation. Such flip-flops won’t prompt GE to review its plans, Flannery said in an interview in his office in Gurgaon near New Delhi today.

“Uncertainty and confusion in business is a bad thing,” Flannery said. “It was easier to operate in the country a year ago than it is today. It is frustrating to look at unresolved issues and know that they’re resolvable if you can get some leadership and orientation around them.”

Singh’s failure to implement the first change to ownership rules in more than five years has sparked concern that his government is too weak to see through bills, including one that proposes as much as 26 percent foreign direct investment in pension funds. The Trinamool Congress, his biggest ally, has vowed to block the legislation and a separate plan to allow overseas carriers pick up stakes in local airlines.

Adjournments

The Congress-led government’s legislative agenda has stalled in the last year after a series of high-profile scandals that led to the jailing of a former minister, bureaucrats and company officials on graft charges related to the sale of mobile-phone airwaves. The last major change to foreign direct investment rules took place in 2006 when the cap on single-brand retail was lifted to 51 percent.

Nine days of protests in parliament over the policy forced repeated adjournments in the winter session that started Nov. 22. About 31 bills are waiting to be passed, including legislation to create an anti-corruption agency with powers to prosecute government officials. Last year’s winter sitting was the least productive in 25 years.

GE plans to invest $200 million in an Indian manufacturing plant near Mumbai to help make parts for power equipment. The Fairfield, Connecticut-based company announced plans in October to build $115 million of wind farms along with Greenko Group Plc.

--Editors: Abhay Singh, Mark Williams

To contact the reporters on this story: Karthikeyan Sundaram in New Delhi at kmeenakshisu@bloomberg.net; Sam Nagarajan in New Delhi at samnagarajan@bloomberg.net

To contact the editors responsible for this story: Neil Denslow at ndenslow@bloomberg.net; David Merritt at dmerritt1@bloomberg.net


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