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India approves foreign direct investment in multi-brand retail

RBR Staff Writer Published 17 September 2012

The Indian government has decided to allow foreign direct investment of upto 51% in the multi-brand retail segment.

The decision of the union cabinet is expected to pave way for several retail majors such as Walmat, Tesco and Carrefour to set stores in India.

Earlier, foreign companies were allowed in the retail sectors only via wholesale joint ventures.

Indian Prime Minister Manmohan Singh said the Cabinet has taken many decisions to bolster economic growth and make India a more attractive destination for foreign investment.

"I believe that these steps will help strengthen our growth process and generate employment in these difficult times," Singh said.

The decision comes with conditions that include: foreign retailers will only be allowed to set up in cities with a population of more than 1 million and mandatory sourcing of 30% of their requirement from small and medium enterprises.

Major retailers such as Tesco, Carrefour and Walmart, have welcomed the move.