India - India opens retail sector to foreign players

NEW DELHI: India's cabinet on Thursday cleared a plan to open the nation's vast retail sector to global supermarket chains in a reform that could herald a consumer revolution, TV channels reported. 

The cabinet approved a proposal to allow international firms to hold a 51 percent stake in multi-brand retailers in one of the Indian government's boldest economic changes, according to television news channel reports. 

Foreign multinationals have lobbied for years to be able to sell directly to consumers in the world's second most populous nation, seeking access to a market estimated by consultancy McKinsey to be worth $450 billion a year. 

"Consumers will have many more choices - it will truly be a borderless world in terms of products available," Gibson Vedamani, board member of the Retailers Association of India, told AFP ahead of the reported decision. 

Multi-brand foreign groups such as US-based Wal-Mart currently operate as wholesalers in India but are prevented from selling directly to the public. The vast majority of consumers currently shop at small local markets. 

Critics have fretted that large, air-conditioned stores will drive small family-owned stores - which currently dominate the market - out of business, despite assurances from industry figures that the market is big enough to embrace all players. 

The Congress-led central government also raised the foreign investment cap to 100 percent from 51 percent at present for single brand retail operations such as Gucci, Nokia or Reebok, the television stations reported. 

The main opposition Hindu nationalist Bharatiya Janata Party (BJP) has vowed to fight the plan, calling it "a tool to kill the domestic (retail) industry". 

"If foreign direct investment in the retail sector is allowed, small traders will lose their jobs as their products will not be able to compete, said Murli Manohar Joshi, a veteran leader of the BJP.

- AFP/al


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