India is set to open its doors to foreign supermarkets within the next four months as it looks to welcome multi-brand grocers as majority partners for the first time.

A committee in India, formed to explore de-regulation in the sector, is understood to have submitted a favourable report, and Ministers are preparing to put the proposal to Cabinet.

The move will come as welcome relief for British retailers which see huge growth potential in India. With current laws, retailers are limited to single brand retail and cash and carry operations.

Last July, David Cameron led the largest Cabinet delegation to India in an attempt to boost trade ties with the world’s second fastest growing economy. Kingfisher chief executive Ian Cheshire attended.

Conditions on relaxing the laws are likely to include obligations on new entrants to invest heavily in “back-end” warehousing, food processing and refrigerated transport networks and to recreate jobs in rural India.

It has suggested that supermarket giants such as Tesco, Carrefour and Walmart will play a vital role in revolutionising the sector by investing heavily in logistics and food processing.

Speaking to The Sunday Telegraph, India’s commerce and industry minister Jyotiraditya Scindia said the government is looking to reassure India’s trade partners that it remains an exciting investment opportunity.

India is currently the world’s largest producer of milk, second largest in fruit and vegetables and third in grain production, but barely 5% of its produce is processed and 30% rots before it reaches the market.    

Tesco said it has made no secret of its desire to build a retail business in India and would be keen to bring these benefits to Indian consumers of regulations permit.