Small retailers oppose foreign investment in e-commerce

MUMBAI (Reuters) - A trade body representing small retailers is opposing a possible government move to allow foreign direct investment in e-commerce, posing the latest challenge for newly elected Prime Minister Narendra Modi's reform drive.

The Confederation of All India Traders, one of the country's largest trade bodies, will organise a rally on Aug. 9, to protest against the impact of such a decision on the livelihoods of small bricks and mortar retailers, it said on Wednesday.

Earlier, the government was forced to partially roll back a steep hike in rail passenger fares, aimed at reducing the country's massive subsidy bill, after protests from political allies.

The business-friendly Modi government is trying to kick- start India's sluggish economy, which has grown at below 5 percent for two years, and win back domestic and foreign investor confidence.

Reuters reported earlier this month that a decision to allow global online retailers such as Amazon to enter India was likely to be announced as early as July, as government officials believed a robust online retail sector would spur manufacturing and consumption.

In 2012, protests from small traders, an important group of voters, forced the Modi-led Bhartiya Janata Party to oppose a decision by then Congress government to allow foreign direct investment in the supermarket sector.

India currently bans global online retailers from selling products they have sourced themselves and forces them to rely on third-party suppliers. Their Indian platforms, which they own fully, are marketplaces for these outside suppliers.

(Reporting by Nandita Bose; Editing by Erica Billingham)