The government of India last Friday opened the retail sector to foreign investors, but many still feel that it would not be easy for foreign players to enter the field straightforwardly.

Foreign multi-brand retailers will have to invest a minimum of $100 million, and 50 per cent of that must go into back-end infrastructure in rural areas. In addition, 30 per cent of goods must be sourced from small & mid-sized local suppliers.

The new rules allow states to opt out of allowing in FDI. Moreover, foreign investors will be allowed to invest in retail stores only in cities of at least one million people.

A top official from local retail chain Trent said, "Everyone is optimistic most states will turn around and eventually allow FDI, but the concern is what if they don't open up, or if they take really long."

Trent, which already runs the Star Bazaar supermarkets in a supply chain partnership with Tesco, is controlled by the Tata Group. Following the government's recent decision, Tesco and Tata are now planning to open new retail stores that would be 51 per cent controlled by Tesco.

Market conditions are also tough. Reliance Industries, the owner of the second-largest supermarket chain in India, has never pocketed a profit in retail.