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India will allow foreign supermarkets into country

Nidhi Dutt Nov 25, 2011

Jeremy Hobson: Well you could forgive executives from Wal-Mart if they’re not paying all that much attention to Black Friday sales today, because this news may end up making the company even more money: India’s government has just announced it’ll allow foreign supermarkets into that country for the first time.

And as the BBC’s Nidhi Dutt reports from Mumbai, that’ll give stores like Wal-Mart and Tesco access to a retail sector worth $450 billion a year.

Nidhi Dutt: Supporters of the move say it will increase competition and quality while reducing prices. But the move is bitterly opposed by millions of Indian “mom and pop” stores who fear they’ll be put out of business by foreign retail giants.

Damji Bhai has owned his food stall in Mumbai for 60 years. He’s not too worried about losing business because he says not all his customers will be able to afford to shop at Walmart.

Damji Bhai: The rich people might go to those stores but medium and small consumers will keep coming to me. Most Indians aren’t that rich to go to big stores to shop.

But there are restrictions. The foreign stores will be permitted only in cities with a population of one million or more. And it might be some time before the foreign stores become a reality — among the obstacles is India’s poor rural infrastructure. Up to half of fresh produce will be lost to a slow transport system before it can be sold.

In Mumbai, I’m the BBC’s Nidhi Dutt, for Marketplace.

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