Prime Minister Manmohan Singh today favoured opening up of the retail trade stating the

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market requires greater competition for a check on prices.

"We need greater competition and therefore need to take a firm view on opening up the retail trade," Singh told Chief Ministers at a meeting convened to deal with the spiralling food prices.

He said there was a huge difference between the wholesale and retail prices. "My colleague Sharadji (Food and Agriculture Minister Sharad Pawar) has on many occasions drawn attention to the wide differences between the retail and farm gate prices and there is evidence that retail prices have shot up more than the wholesale prices."

Under the present dispensation, only domestic business houses are allowed to enter the organised retail sector for multi-brand businesses.

The government has not taken a view on opening retail trade to foreign direct investment (FDI), though overseas companies are permitted in wholesale trade and single-brand high-end businesses like Nike and Louis vuitton.

The UPA government has so far maintained that it would encourage FDI in the back-end supply chain.

The world's number one retail chain, WalMart, has settled for cash and carry (whole sale) joint venture with the Bharti Group. Less than five per cent of India's retail is organised and domestic players like Reliance, Future Group's Big Bazaar have grown over the last few years.