India opens retail sector to foreign stores
The Indian government has allowed single-brand foreign retailers to
open stores, clearing the way for companies such as Starbucks and Ikea.
Retailers can now invest beyond the previous limit of 51 percent
ownership. However, they are required to buy 30 percent of their goods
from domestic small industries. The move is a step forward after plans
to open up the lucrative supermarket, or multi-brand sector, were
delayed following a political outcry.
The cabinet approved the plan to allow wholly foreign-owned “single
brand stores” in December. A government notification was issued
announcing its implementation. Large domestic retailers were happy with
the agreement, which was pushed through by the government recently.
“This is a welcome move with a clear potential to lift the general mood
in the economy,” said Rajan Bharti Mittal, managing director of Bharti
Enterprises which partners with Wal-Mart supermarkets.
Previous attempts to open up the retail sector have met with mass
protests in the country and within the government. Prime Minister
Manmohan Singh reversed a decision in December to let multi-brand
companies such as Wal-Mart and Carrefour to open supermarkets in India.
Those against the move said it would hurt small local businesses.
Minister Singh has said he will renew the attempt to open up the sector
after regional elections in 2012. (BBC)