Indian shopkeepers force new supermarkets to close

The authorities in India's most populous state have ordered the closure of more than a dozen new supermarkets after demonstrations by activists who claim the stores will destroy the livelihoods of traditional farmers and shopkeepers.

In a rare blow against the interests of big business in India, the state government in Uttar Pradesh ordered Reliance Industries and the RPG Group to close the stores, many of which had only been opened on Wednesday. The openings of the Reliance Fresh stores were met with violent protests in the cities of Lucknow and Banares.

The state's chief minister, who goes under the one name of Mayawati, said: "There has been widespread protest against the opening of retail shops by big corporate houses. Fearing further deterioration in the law and order situation, we have decided to close down such retail shops."

The decision by Mayawati, who was elected earlier this year, highlights one of India's many faultlines as the country's economic transformation continues. While the middle classes continue to prosper, the gap between the rich and poor is growing.

Nothing highlights that tension more clearly than the battle over India's retail sector. Reliance Industries, which already has 250 stores across the country, is preparing to spend $5.6bn (£2.8bn) on more stores in a move it believes will revolutionise the way Indians shop. Only 4 per cent of the retail sector is "organised" and the overwhelming majority of people buy their food from small markets or else an estimated 12 million small family-run shops.

The potential profits for companies such as Reliance, as well as foreign corporations such as Wal-Mart and Tesco which are very keen to enter the sector, are huge. Some analysts have estimated India's $350bn retail industry could double in size by 2015 as the country's middle class enjoys an unprecedented purchasing power.

Reliance's well-heeled customers voiced their disappointment over the closures. At a supermarket in Noida, a satellite city of Delhi, which was about to close, one of the customers, V P S Nanda, summed up the reasons he shopped in the Western-style store.

"In the street markets it's not hygienic, their weights don't work and there's no air-conditioning," Mr Nanda, a stationery shop owner, told Reuters.