Updated on
Summary The Indian government has opened retail sector to global supermarket chains.
Indias government has once again cleared a controversial plan to open up its lucrative retail sector to global supermarket chains.Last year, the government suspended a similar plan after fierce opposition from its allies and political rivals.International firms such as Walmart and Tesco will now be able to buy up to a 51% stake in multi-brand retailers.Analysts say the government has reintroduced the measure in an effort to revive a flagging economy.Prime Minister Manmohan Singh is reported to have told cabinet colleagues that the time for big bang reform has come; we have to go down fighting.The decision was one of several key reforms announced by the government. It also approved a plan to allow foreign airlines to buy 49% stakes in local carriers, in the hope that this will boost the countrys troubled aviation sector. Indias government has once again cleared a controversial plan to open up its lucrative retail sector to global supermarket chains.Last year, the government suspended a similar plan after fierce opposition from its allies and political rivals.International firms such as Walmart and Tesco will now be able to buy up to a 51% stake in multi-brand retailers.Analysts say the government has reintroduced the measure in an effort to revive a flagging economy.Prime Minister Manmohan Singh is reported to have told cabinet colleagues that the time for big bang reform has come; we have to go down fighting.The decision was one of several key reforms announced by the government. It also approved a plan to allow foreign airlines to buy 49% stakes in local carriers, in the hope that this will boost the countrys troubled aviation sector. Reports suggest that other conditions have also been imposed on groups wanting to invest in India.For example, companies will have to invest at least $100m (£67m), open outlets only in towns with a population of more than one million and source at least 30% of produce from India, the AFP news agency reports.Similar conditions were suggested when the government first attempted to introduce the plan last year.Multinational retailers such as like Walmart, Carrefour and Tesco already have outlets in India, but they deal with smaller retailers. This decision allows these chains to sell directly to Indian consumers.Wal-Mart said greater investment following the governments move would lower the price of products, improve the livelihoods of farmers and ease supply-side inflation.
