Politics may come into picture as some leaders have raised concerned for the future of small retailers after the entry big names like Wal-mart, Reliance etc.

Economic Times reported that the political storm over FDI in retail gathered strength on Wednesday with the debate now spilling over to organised domestic retail too. Congress president Sonia Gandhi has sent a letter to Prime Minister Manmohan Singh in this regard.

Politicians now want to know if the emergence of large retailers was behind the current rise in retail prices of grocery and vegetables.

With Congress backing their leader’s concern for small retailers and apprehensions about the impact of Wal-Mart’s entry into India, formulation of rules and policy consultations on allowing foreign direct investment (FDI) in sectors like stationery, sports goods, construction equipment and electronic hardware has come to a grinding halt.

With Ms Gandhi’s letter to Mr Singh-suggesting a thorough review of the impact of retail opening up on small traders-being forwarded to the commerce and industry ministry, further liberalisation of retail FDI came to a halt and even the existing windows came under the cloud. Commerce & industry minister Kamal Nath said the impact of FDI in retail would be studied in line with the PMO’s wishes. He confirmed that the PMO has sought details on the FDI policy on retail. “We have sent our comments,” he added.

Congress spokesman Abhishek Singhvi waffled when grilled by journalists about the party’s stand on the impact of domestic organised retail on small traders. Kerala chief minister VS Achuthanandan, it may be recalled, had blamed the recent spurt in prices on Reliance’s procurement for its retail operations.

Confirming a halt in all retail FDI-related work, a senior government official told ET, “Till we get further communication from the bosses, the proposal to open FDI in more areas has been put on hold.”

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