The Indian government has emphasised that some 30% of products sourced by foreign retailers will have to come from small Indian manufacturers under its new plans to allow foreign retailers to own 51% of multi-brand retail stores.

It believes the move will encourage domestic value-addition and manufacturing,  creating multiplier effects for technology upgrades and income generation. Previously, major retailers like Wal-Mart, Tesco, and Metro could only sell through wholesale in India.

Some 30% of products will need to be sourced from Indian micro and small industry, from companies having less than $1m capital investment. The government had previously said that 30% of products would have to come from any small industry around the world.

The update came as reports are emerging that chief ministers in several government-allied states and some legislators within the ruling Congress party are pressing the government to reverse its decision on FDI.

Companies looking to enter the country will have to invest US$100m, with at least 50% of that spend in back-end infrastructure, including processing, manufacturing, distribution, innovation, quality control, logistics, storage, agriculture and market produce infrastructure. Land cost and rentals will not count towards this total.

The government only plans to open up cities with a population of more than 1m, which covers some 53 cities across the country. As India has a federal structure of government, individual states will have to decide whether to adopt the legislation.