Indias decision could lead to wave of foreign investment

India's decision could lead to wave of foreign investment

The Indian government has reportedly approved plans to further open up the country's retail industry, a decision that could see a wave of foreign investment into the sector.

Indian food minister K.V. Thomas said today (24 November) that the country's government had decided to allow overseas companies to own a 51% stake in supermarket chains, Reuters reported.

Under the plans, foreign companies will also be allowed to own 100% of single-brand outlets.

India has long been held up as a key market for multinational retailers but expansion into the country has been hampered by restrictions on foreign ownership.

In the face of opposition from some politicians and local traders, there have been limits on how far foreign retailers could invest in India. The government had said overseas companies could own a 51% stake in single-brand stores, like Marks and Spencer, but foreign retailers could not run multi-brand outlets, like supermarkets.

Overseas companies, however, have been allowed to own cash-and-carry wholesale outlets and the likes of Wal-Mart Stores, Metro Group and Tesco have followed this route.

Supporters of an easing of the rules argue that foreign investment could improve India's supply chain and reduce the amount of food wasted in a country where inflation remains high.