The Cabinet Committee on Infrastructure today approved 51 per cent foreign participation in multi-brand retail business, despite opposition from ruling ally Trinamool Congress and the main opposition Bhartiya Janata Party.
The opposition says the decision to let in cash-rich global retailers like Walmart, Tesco and Carrefour to open outlet chains in India will push millions of small neighbourhood shops across the country out of the trade and create a new breed of unemployed.
Consumer groups and business associations have welcomed the policy shift, saying it would benefit all stakeholders, consumers, producers and the economy in general.
Consumers will get a large assortment of quality goods and merchandise at reasonable prices. For agricultural produce, this will enable the upgradation of post-harvest and cold chain infrastructure and bring in new technology and management know-how.
This, in turn, would lead to higher productivity in manufacturing and food processing, thereby helping to cut down wastage, increase employment and exports and the country's GDP, they say.
They also counter the argument that FDI in retail will push out small retailers citing China where retailers still hold majority of retail share. The number of small retailers in China is reported to have doubled post opening of FDI. A majority of the Top 20 retail chains in China are still Chinese, they point out.