India's cabinet has agreed to controversial proposals to open up its retail market to global supermarket chains, the British Broadcasting Corporation (BBC) reported.

Trade Minister Anand Sharma said before the decision, which has been pending for two years, there was "a broad-based consensus" in favour.

Food minister KV Thomas, said the cabinet had agreed to 51% foreign ownership of multi-brand retail stores, which currently can only sell on a wholesale basis in India.

Retailers Association of India representative Gibson Vedamani, said this was good for consumers.

"They will have more choices. It will truly be a borderless world in terms of products available," he was quoted as saying.

Supporters of the move say it will increase competition and quality while reducing prices, which have been hit by near double digit inflation.

Opponents say the multi-nationals will squeeze out India's smaller and poorer traders and drive down prices paid to India's farmers.

The main opposition party Bharatiya Janata Party (BJP) is opposed to the proposal and there have been street protests by traders.

BJP politician Murli Manohar Joshi said the move was "a tool to kill the domestic retail industry".

Some analysts have pointed to the potential political fallout and say there may be another move to postpone any decision.

The multi-nationals have long been eyeing the lucrative Indian market.

Tesco has welcomed the decision.

"We already have a franchise arrangement with Tata's Star Bazaar stores. Learning about India and serving more customers every month is a win-win for customers, suppliers, Tesco and Tata," the company was quoted as saying.

Any easing of regulations could eventually come with strict controls, for example on local sourcing and levels of investment.

Photo: The-nri.com

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