The domestic retail sector, on Friday, welcomed the government’s decision to allow 51 per cent foreign direct investment (FDI) in multi-brand retail trading.

“It is a positive development for the industry,’’ Pranab Barua, Business Director and Head (Apparel and Retail Business), Aditya Birla Group, said. “We believe this will bring investments into the retail industry. Furthermore, this will help bring relevant technology, increase competition and improve customer service, ultimately benefiting farmers and consumers.’’

“The two major advantages will be the investment that will come in the back-end as well as the reduction in wastage and, secondly, the huge benefit to customers,’’ Mr. Barua told this correspondent.

“However,’’ he added, “as we have not seen the fine print, we will need to study the impact at the State level and the ability to implement the policy will depend on how many States opt for it.’’

Govind Shrikhande, Managing Director and & Customer Care Associate, Shopper’s Stop, was cautiously optimistic saying that it was “a good start but not the only solution. Apart from this, the sector needs changes in service tax, octroi and the like. The biggest worry for the growth of the sector would be availability of quality retail space — rentals are high and the developments are not well planned.’’

“I do not think this will open the floodgates for FDI to come pouring in as there are still issues such as product sourcing and, of course, retail space.’’

Presenting a more optimistic view, Kumar Rajagopalan, CEO, Retailers Association of India, a body representing large organised retail players, told The Hindu, “this is a big step for the $500-billion Indian retail sector, and there are a lot of multi-nationals waiting to enter India. They have been worried over where the economic policy was going but this will give them the confidence. The Indian retail sector needed investments to start coming in to move on to the next phase of growth.’’

Further, he added, “This is a difficult market and needs local understanding of global sourcing but one can foresee around $30 billion FDI coming into the Indian retail sector over the next two years and a doubling of the sector in five years.’’

Indrani Dutta reports from Kolkata:

Commenting on the decision on FDI in retail, Sanjiv Goenka , chairman RP-Sanjiv Goenka Group which owns the Spencer’s Retail chain, said that it was a very welcome step which shows the government’s intention to put reforms back on the agenda. “It is good for Indian retail.”