The Indian government on Tuesday removed restrictions on foreign investment in single-brand retail.
According to a report by Reuters, the move opens the door for retail giants such as IKEA to enter the country without the need to partner with a local company.
Until now only 51 per cent Foreign Direct Investment (FDI) was allowed in single brand retail.
As a condition of the move, however, foreign retailers will be required to source 30 per cent of their goods from small and village industries, Reuters reported.
The liberalisation of the sector has been praised by major local retailers, which see the capital and expertise of foreign companies as important tools in modernising the country’s retail sector.
"This is a welcome move with a clear potential to lift the general mood in the economy," said Rajan Bharti Mittal, managing director of Bharti Enterprises, which operates a cash-and-carry business in partnership with US retailer Walmart.
As well as providing more choice to consumers, the move would improve the efficiency of domestic retail operations by increasing access to global designs, technologies and management practices, he said.
There has still been no word on opening up the multi-brand retail sector to FDI, however.
Moves to allow 51 per cent FDI in this sector late last year, which would open the door to retail giants such as Walmart and Carrefour, were met with violent protest, and plans have been on hold ever since.
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