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The Indian government last week approved regulatory reform that will open its $450 billion retail market to global retailing giants, allowing companies such as Walmart, Carrefour and Tesco to have majority ownership of chains operating in Asia’s third largest economy.

Reuters reports that these global companies “see India's retail sector as one of the last frontier markets, where a burgeoning middle-class still shops at local, family-owned merchants.” The regulatory shift is designed to “attract much needed capital from abroad and ultimately help unclog supply bottlenecks that have kept inflation stubbornly close to a double-digit clip.”

The Times of India reports that while Walmart has heralded the move as offering it a great opportunity, it seems at least possible that its stores there may not carry the Walmart banner. (This would not be unprecedented; in Japan, for example, its stores operate under the Seiyu banner, and in the UK it operates as Asda.) To this point, Walmart has had a minority stake in an Indian cash-and-carry operation with Bharti Enterprises.

However, Bloomberg BusinessWeek reports this morning that the shift is causing some significant political turmoil in India, with opposition parties attacking the ruling party’s decision, and close to half of India’s biggest cities considering local ordinances that would prevent overseas retailers from opening there.

In addition, Reuters reports that the ruling government already has started to back off some of the shift’s provisions, saying, for example, that “foreign supermarkets wanting to set up shop in India will have to source 30 percent of their produce from local, small industries.”
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