AlHijjah 29, 1432, Nov 25, 2011, SPA -- Global supermarket chains hailed India's move to open up its $450 billion retail market, but cautioned that the policy's fine print may keep a lid on investment in the short term, Reuters reported. The government late on Thursday approved 51 percent foreign direct investment in supermarkets, paving the way for firms such as Wal-Mart Stores Inc, Tesco and Carrefour to enter one of the world's largest untapped markets. Shares in Indian retailers jumped -- bucking a fall on the wider stock market -- as they should tie up deals with these big foreign retailers. The move may breathe new life into the government of Prime Minister Manmohan Singh, who ushered in free market reforms 20 years ago, but has been bogged down by corruption scandals and was starting to be seen as a lame duck. As well as appealing to India's burgeoning urban middle class the reform will draw in much-needed new investment to a sputtering economy. Policymakers say spending on cold-storage and warehousing will ease supply side pressures that have driven inflation close to a double-digit clip. "It's important not only for raising overall growth, but also for containing inflation and improving the quality of life for over 50 percent of the population," said central bank Governor Duvvuri Subbarao. The move, opposed by millions of small shop owners who fear for their livelihoods, prompted an uproar in India's parliament which was forced to close until Monday. India's biggest listed company, Reliance Industries, was forced to backtrack on plans in 2007 to open Western-style supermarkets in the state of Uttar Pradesh after huge protests from small traders and political parties. Bijou Kurien, a senior executive at Reliance Retail, said the mood had changed now, and predicted new arrivals would have a smoother ride. "The regulatory and non-regulatory pressures in India are the way of life," he said. "So any person running a business in India has to be able to figure out how to steer their way through all the obstacles that can be in their path." He said the back-end and sourcing rules may stop big-box electronics stores from coming into India for now, but said the rules would likely soften in the medium term. Thomas Varghese, CEO of another Indian retailer, Aditya Birla, said the power given to states could be a short-term hurdle, but he predicted most would say yes to supermarkets. -- SPA
