As the union commerce and Industry Minister of two years, Kamal Nath has been a tacit supporter of FDI in retail. Recently, Nath managed to get consensus on and approval for 51 per cent ownership by single-brand retailers. However, allowing multi-brand retailers like Wal-Mart in may be some time away. In an interview to Business Today's R. Sridharan, the minister-whose book rack at his office in Delhi's Udyog Bhawan sports a copy of Sam Walton's autobiography Made in America-explained why:

At the Hanover Technology Fair in late April this year, you said that you would announce the "second stage" of retail reforms by mid-June. Are you on track, and what exactly does it entail?

Retail is not an easy sector to deal with when it comes to FDI (foreign direct investment). As you know, 97 per cent of the trade is dominated by mom-n-pop stores and the sector is the second-largest employer after agriculture (6-7 per cent of the total workforce is employed in retail). Opening of FDI in retail should not displace or replace the existing small players, and any decision on this has to be based on the widest possible political consensus and stakeholder consultations.

But the threat to kirana stores is from any big player, it doesn't matter whether he is Indian or foreign.

You have a point, but the general apprehension is that global retail chains, with their deep pockets, would be able to sustain losses for many years till their immediate competitors are wiped off. The predatory pricing strategy of large retailers would drive out small retailers, resulting in job losses. Again, these are only general apprehensions.

Yet, you have allowed single-brand retailers to come in with 51 per cent equity ownership.

I think consumers would benefit from foreign investment in segments like consumer durables, apparel or even home improvement. We are going to host the Commonwealth Games in 2010, can you think of any one big retail store where you can get all sorts of sports goods? Is there a hardware store you can go to for do-it-yourself home improvement? So far, investments in the organised formats have only taken place at the front end (outlets), while the back-end (supply chain) has not attracted investment.

Unless you allow big retailers why will anyone invest in the back-end-even if you allow FDI here?

We have not taken any decision in this regard, but we must evolve a model that results in an incremental growth of the organised retail sector, generates new jobs, and attracts investment not merely in outlets, but also in the entire supply chain, logistics and other services.

When do you think some further opening up of retail to FDI will happen?

We are looking at how to address all the issues I mentioned earlier and we have asked foreign retailers also to give us a tear-free model, but I don't think we have set a date for it.

Do you think your allies' victories in the five states will strengthen the UPA government's hand and allow for greater reforms, and in retail in specific?

Certainly, we believe that much more consolidation is happening in Indian polity, and that bodes well for reforms in general.