Photo: Mamta Badkar
The Indian government which has long been criticised for its protectionist policies, has finally relaxed rules governing foreign direct investment (FDI) in its $420 billion retail sector.The move gives international supermarkets the opportunity to tap into India’s massive consumer base.
Foreign groups can now invest up to 51% in multi-brand retailers (supermarkets), and up to 100% in single-brand retailers. This is great news for companies like Wal-Mart, Carrefour and Ikea that have wanted to enter the Indian market.
The Indian government hope the move will also help ease food inflation which dropped to 9% but is above the government target. The change in policy is also expected to help boost infrastructure and improve supply chain efficiency.
But the Wall Street Journal reports that retailers may not jump on the bandwagon right away, since they still face local opposition and regulatory hurdles, and the government has yet to introduce its new goods and services tax.
If successful, the reform could create up to 10 million jobs, but opposition parties have threatened to burn down any Wal-Mart stores that open in the country.