India may open multi-brand retail sector 'within weeks': finmin source (Reuters)

NEW DELHI (Reuters) ? The cabinet will decide within weeks whether to allow retailers, such as Wal-Mart Stores Inc, to operate in the country with a majority stake, a source in the finance ministry said on Wednesday.

The finance ministry has thrown its weight behind a proposal to open the so-called multi-brand retail sector to foreign direct investors, a policy change that has been in the works for years but has snagged on opposition from smaller retailers.

"A decision on the issue is only a matter of weeks (away)," the source told Reuters, adding, the cabinet may take a decision as early as next week.

India currently allows 51 percent foreign investment in single-brand retailers and 100 percent for wholesale operations, a policy that the world's top retailer Wal-Mart and Carrefour among others have lobbied to change for years.

In the backdrop of a slowing economy and the government struggling to shake off an image of policy paralysis, momentum to open up the multi-brand sector appears to have picked up.

Another government source told Reuters last week that a decision looked imminent.

However, a senior government adviser on Sunday said the policy still lacked political consensus.

Small shop owners that account for more than 90 percent of India's $450 billion retail sector oppose the entry of foreign players, fearing that they will be put out of business.

A group of senior civil servants approved the proposal to open the sector to foreign players in July, although it recommended strict local sourcing requirements and minimum investment levels.

The finance ministry was in favour of such riders, the source said.

An executive of British retail giant Tesco Plc told Reuters the company plans to build on its existing tie-up with Tata Group to expand if foreign operators are allowed to invest in multi-brand retail.

(Reporting by Manoj Kumar; editing by Malini Menon)

Source: http://us.rd.yahoo.com/dailynews/rss/india/*http%3A//news.yahoo.com/s/nm/20111123/india_nm/india606824

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