India will open up its $330 billion retail market to foreign investors after convincing mom and pop store owners that their jobs are not at threat from big players, Finance Minister P Chidambaram has said.
"In course of time their fears will be allayed and it is only a matter of time before the policy is tweaked to allow FDI in retail," he said during an interaction with students of Wharton School of the University of Pennsylvania in Philadelphia.
While political opposition to allowing FDI is well known, there has been a growing opposition from tens of thousands of small retailers who employ millions of people to even entry of domestic corporates into the sector.
"Experience tells us (organised) retail does not drive them (small retailers) out. They will reorganise themselves and thrive. But there is genuine fear that has to be allayed," Chidambaram told students at a packed Dhirubhai Ambani auditorium at the school after delivering the Wharton Leadership Lecture.
Earlier this week, Commerce and Industry Minister Kamal Nath had said that the issue was not about allowing FDI in retail but that of large versus small players. His ministry has asked economic think-tank ICRIER to study the situation and the report is expected in a month.
Nath's comments had an unsettling effect on big companies, which have presence in retail, as only last month some of the corporate-run food stores received orders to shut shop in Uttar Pradesh. The state government, which cited law and order problems for the decision, has appointed its own commission to study the problem, but the report is yet to be tabled.