India likely to further open retail sector to foreign investment: reports

Global retail giants such as Wal-Mart and Germany's Metro AG have been lobbying the Indian government for years to open the country's retail sector, which is growing 30 percent annually.

NEW DELHI
India is likely to further open up the country's vast retail market, one of the world's fastest growing, to foreign investment, media reports said on Wednesday.

India has been reluctant to open its booming retail market, estimated at more than US$200 billion (euro160 billion), fearing it would hurt the 12 million ‘mom-and-pop’ shops that currently dominate the market.

However, the government is now considering opening up sectors like electronics, sports goods and building equipment, where local businesses are not well established, the Times of India newspaper reported citing unnamed sources.

Asked about the report, Commerce Minister Kamal Nath told reporters that Prime Minister Manmohan Singh had asked him to look into the issue, but he gave no further details.

Global retail giants such as Wal-Mart and Germany's Metro AG have been lobbying the Indian government for years to open the country's retail sector, which is growing 30 percent annually.

India currently allows foreign investment only in single brand stores.

Sales through company-owned network stores _ also called organized retailing _ currently total about US$8 billion (euro6.4 billion), or less than 5 percent of the market.

Rising middle class incomes and an increase in demand for branded products, however, make India a compelling destination for global retail companies.