The government said on Tuesday it was prepared to launch an inquiry into lobbying by Wal-Mart Stores Inc, buckling under an opposition campaign to discredit a flagship economic policy that allows foreign supermarkets to trade in Asia's third largest economy.
Prime Minister Manmohan Singh has pressed ahead with the policy despite fierce political opposition, arguing that foreign capital and expertise is needed to revive the flagging economy and modernise India's food supply chain.
Opposition uproar over the issue has repeatedly caused parliament to be adjourned in recent weeks and derailed efforts to pass more reforms to bring investment to the banking, pensions and insurance industries.
In a recent disclosure filing, Wal-Mart told US authorities it had spent $25 million on lobbying activities in the United States over the past four years to help win market access to markets including India - considered one of the last major frontiers for global retailers.
The opposition parties, led by the right-wing Bharatiya Janata Party (BJP), have seized on media coverage of the filing as evidence the company had engaged in lobbying in India, even though the filing referred only to lobbying activities in the United States.
"The government views this with as much concern as all sections of the house and has no hesitation in having an inquiry ... to get to the facts of the matter," Parliamentary Affairs Minister Kamal Nath told parliament.
He said he would announce steps towards an inquiry in parliament later on Tuesday. But later his office strongly denied he had given a date for any action, raising questions about whether the government would indeed launch an investigation.
Wal-Mart, which discloses issues and expenditures associated with lobbying in various markets on a quarterly basis in the United States, said the allegations it had lobbied in India were "entirely false".
"The expenditures are a compilation of expenses associated with staff, association dues, consultants, and contributions spent in the United States," a spokesman for the company's local tie-up Bharti Walmart said.