India's Reliance Retail has put in place plans to lay off 1,000 workers in the state of Uttar Pradesh after protests from small shopkeepers forced the closure of ten stores.

Reliance, which plans to spend US$6bn on expansion over the next four years, has seen its ambitions take a hit from opposition from local traders wary of competition in India's fast-growing retail sector.

The state government in Uttar Pradesh, India's most populous state, ordered the closure of ten Reliance Fresh outlets last month following the protests.

Reliance is in negotiations with the local government but just-food understands the company could sack 1,000 workers should it fail to get the stores re-opened. "It's a delicate situation," a source close to the situation told just-food today (26 September).

Reliance, an arm of India's largest private company, Reliance Industries, plans to embark on ambitious expansion plans across the country.

According to figures published by Reliance Industries last week, the Indian retail sector is a $270bn business growing at over 13% a year. The opportunity for the likes of Reliance - and multinational retailers like Wal-Mart - is that under 5% of the industry is "organised". Small, "mom and pop" outlets dominate the sector.

The company wants to expand its store network to around 5,000 outlets across India by 2011 but protests in Uttar Pradesh have raised concerns that those plans could be derailed in other parts of the country.

The source, however, said that, while there is some opposition to Reliance's plans elsewhere in India, it is only in Uttar Pradesh where the company has "an issue".

Reliance is understood to be confident it can proceed with its expansion strategy, which in the months ahead will focus on the roll-out of its Reliance Fresh convenience stores across the country. The Reliance Fresh network currently numbers only around 300 stores.