I'm going to point out the obvious: China, despite its capital controls and partnership requirements for foreign investors, has outdone India in FDI flows.

I'll pull a cop-out here before I stretch my luck. This action can go two ways. First, it might make India more attractive relative to China in that the local partnership requirements are waived. Still, it might also make foreign investors suspicious that India is offering more generous terms. They might think India is doing so due to a perception that it's a less attractive investment target. The principle of price conveying information in an economics or marketing sense is at work in the second possibility.

India's "Communist-backed government?"

What?

Seems the major changes will have to wait:

"India's Communist-backed government on Thursday night shied away from approving a sweeping liberalisation of foreign direct investment rules that would have kickstarted a stalled programme of economic reforms." Via the FT.

http://psdblog.worldbank.org/psdblog/2005/11/reforms_on_the_.html

the govt. of india is trying by hook or by crook to introduce fdi in retail at the behest of walmart and the u.s. govt.knowing full well there is no logical case in the indian situation to allow it as yet as it is premature.

pl see http://www.prajatantra.blogpsot.com
for specific articles on fdi in retail in india

Somebody here had a reaction to the words "communist backed" Indian government - welcome to the strange world of indian politics.

Even though the country is decidedly moving to a two party system ,there are more political parties in India than you can count with all your neurons...and the evil commies are prevalent as well -which is rather strange in the world's largest democracy, and an indication of its socialist past.

The commies have abt 10% of the seats in the lower house of the Indian Parliament but it is good enough to be a crucial source of support for the present government- they are not a part of the Cabinet, they do not have any body representing them in the Govt of India - how ever this does not stop them from being the single biggest source of pain when it comes to issues of national importance. of course they are bankrupt morally, idealogically just like their comrades worldwide.

My own take for the hesitancy - India has no idea of what 100% FDI is going to do it's cherished policy of being as self dependent as possible - and does not want to know any time soon

It is clear that the Indian Government is all set to ignore or steamroller objections from the domestic business community not to open up retail sector. The enfeebled BJP and its other partners in the NDA have so far not found it necessary to unambiguously and forcefully articulate their position on this major issue of Trade Policy. Indeed, they seem to lack the will to function as a responsible Opposition beyond making perfunctory noises over issues of no great consequence. The only real objections that have received the Government’s ears have been from the Left parties. It remains to be seen, however, whether the Left would continue to advance its valid objections to resist the Government’s intentions or let the Government have its way due to political expediency. FDI in Retail is an issue where the Left may well decide not to give up its valid stand. It would be sad if that did not happen.