In a big move, the Indian government on Friday cleared the proposal to allow up to 51% Foreign Direct Investment (FDI) in multi-brand retail. The government has allowed the FDI on the condition that states will be allowed to decide whether they want to opt for it.

In another big move, Indian government also permitted FDI, up to 100%, in single brand product retail trading, subject to specified conditions primary one being for FDI proposals beyond 51% in single brand retail, 30% sourcing from 'Small Industries' has been made mandatory.

India Backs Foreign Investment in Retail Sector

After years of intense debate, India’s government agreed on Friday to open the country’s retail sector to global behemoths like Wal-Mart and Ikea, pushing for a profound shift in India’s economic and political direction.

India is still mostly a nation of small shopkeepers and farmers, and its economy is heavily controlled by the government, a legacy from decades of socialist policies. But a sharp slowdown in economic growth and a sense of impending political collapse prompted the government to finally act on long-pending proposals to loosen market restrictions in hopes of luring more foreign investment and expertise.

“The time for big-bang reforms has come,” the prime minister, Manmohan Singh, said, “and if we go down, we will go down fighting.”