Though local retailers resist the move, International retail chains will offer more choice and convenience to consumers

The Union Cabinet’s proposal for foreign direct investment (FDI) in retail has met with stiff opposition from traders across India. Their worry is that the appearance of multi-brand retail outlets such as Walmart, Tesco and Carrefour will affect their business.

These giant retailers have until now been unable to set up stores in India, limited by regulation that has prevented majority ownership. These firms, if the government’s proposal is eventually accepted, will be able to own 51% equity in stores set up here.

Faced with stiff opposition this proposal has been temporarily put on hold, however 100% ownership in single-brand stores is on the cards and is likely to bring brands such as IKEA to India.

From the consumer’s point of view, large multi-brand outlets will potentially offer lower prices, a wider range of products to choose from and a better shopping experience.

The government has suggested that the foreign firms also be forced to invest in developing rural infrastructure, and the supply chains through which farmers and small manufacturers send their produce to the market.

The government says that a procurement quota of 30% set aside for small and medium manufacturers will help them, as will the fact that retailers will source directly from farmers, cutting out the middle-men who currently take a share of the farmer’s profit. For the consumer, increased competition is a positive move and will likely lead to better service and cheaper products.