India seeks more foreign investment

India’s Cabinet decided to allow more foreign direct investment in the nation’s huge retail industry, a move that could strengthen the countrys food supply chain and open India to giant global retailers.Top retailers such as Wal-Mart, Carrefour, Tesco and IKEA have long lobbied for a chance to build stores in the country of 1.2 billion people. Foreign multibrand retailers have Indian partners in wholesale operations, but no retail presence.Multibrand retail stores could be built with up to 51 percent foreign direct investment under the change the Cabinet approved Thursday. The Cabinet also allowed 100 percent foreign direct investment of single-brand retail operations, up from 51 percent.Advocates see the move as a way to strengthen Indias almost absent food supply chain which is so beset by spoilage, poor infrastructure, hoarding and middlemen that the government estimates some 30 percent of the countrys produce rots while food costs soar and tens of millions of people go to bed hungry each night.Opposition parties and some allies of the government resisted the move. The country has struggled to find consensus because of concerns about whether expanding foreign investment could hurt millions of small shopkeepers, as well as the poor.The spokesman for the ruling Congress party, Abhishek Manu Singhvi, called the decision “centrist and reasonable”.The main opposition, the right-wing Bharatiya Janata Party, decried the move.“The government has clearly bowed to international pressure,” Chandan Mitra, a spokesman said.Wal-Mart, British-based Tesco PLC and French-based retailer Carrefour welcomed the decision. “Allowing foreign direct investment in retail would be good news for Indian consumers and businesses, and we await further details on any conditions,” Tesco said in its statement.Raj Jain, president of Walmart India, called it an “first important step,” but added in an e-mailed statement that the company will need to study the details further to determine how it will affect its ability to do business in India.The Ministry of Commerce says it will cost 76.9 billion rupees ($1.7 billion) to build the additional 35 million metric tons of food storage India needs. In a July paper, it suggested that loosening restrictions on foreign investment in Indias retail sector could be the best way to get more storage space built.