India to lift retail investment ban

An announcement from Indian prime minister Manmohan Singh that his country will soon allow direct foreign investment in the retail sector gave US retail giant Wal-Mart hope that it will soon be able to enter India’s $180 billion retail market.

Asked when “soon” might be, Mr. Singh said that the changes would probably come this year. A senior government official later said that the ban could be lifted before Mr. Singh meets with US president George W. Bush in July.

The comments came while Wal-Mart officials were in India to discuss the company’s plans.

There are concerns, however, over the entry of large retailers into an industry dominated by small family businesses. Large retailers currently control only around 3 percent of the retail market in India.

Indian retailers are also concerned that allowing companies like Wal-Mart into the Indian market would mean an influx of imported goods.

The cultural impact of a retailer like Wal-Mart would be significant in India, even in large cities like New Delhi, where most food bought by its 14 - 15 million people is still purchased from small corner stores, street markets, and through door-to-door sales.

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