International supermarket chains such as Carrefour and Wal-Mart look set to be granted branding rights in India as early as next week.

According to media reports, the chains will be able to operate with a majority foreign-owned stake subject to local sourcing rules.

A government source is reported as saying a plan to allow up to 100 per cent ownership has been reviewed already. The source said cabinet will be asked to approve the plan next week.

Foreign investors in India are currently allowed with 51 per cent investment for single-brand retailing and 100 per cent for wholesaling operations.

Local supermarket owners, who comprise more than 90 per cent of India’s retail sector, fear the presence of foreign supermarket chains will force them out of business.

To address the issue, the cabinet note has stipulated that at least 30 per cent of manufactured and processed products should be sourced from local industry.

Foreign players are also required to invest a minimum of US$100 million, of which half will go into storage infrastructure and back-end logistics.

The finance ministry threw its weight behind the suggestion on lifting the cap from 51 per cent to 100 per cent on single-brand retailing.

Tesco, a UK giant retailer, is aiming to expand in the country through a tie up with India’s Tata Group once the government permits foreign investors to operate multi-brand retailing.

GB