* BJP party has big support base among small traders
* Modi, ahead in polls, says do not fear competition
* India's $500-billion retail sector an electoral issue
By Manoj Kumar and Frank Jack Daniel
NEW DELHI, Feb 27 India's opposition leader -
who polls suggest may be elected prime minister this year - said
on Thursday small retailers must learn to work with large modern
stores and online companies, signaling a shift in policy on a
key electoral issue.
Narendra Modi's Bharatiya Janata Party (BJP) opposes the
government's move to let foreign supermarkets open in India,
saying they are a threat to millions of grocery stores and
traders who form a pillar of party support.
Modi, 63, chief minister of Gujarat state which has enjoyed
strong growth during his decade in office, has given few clues
on how he would steer the national economy whose growth has any
The Hindu nationalist leader is widening his poll lead
before a general election likely to be held in April and May.
The Pew Research Center said Indians favour Modi as prime
minister over his rival, ruling Congress party candidate Rahul
Gandhi, by a margin of three to one.
However, his coalition is still short of a majority and it
is notoriously hard to predict winners in India's multi-party
political landscape and first-past-the-post system.
Sketching out his economic views in a series of speeches on
Thursday, Modi said India must boost trade thropugh "economic
diplomacy" and slash red tape, and said it needed a strong
government to restore investor confidence.
He criticised the outgoing adminstration of Manmohan Singh
for almost halving the pace of economic growth.
"If we come to power, first we will have to fill up the
potholes created by this government," he said.
Modi did not reiterate his party's stance against foreign
supermarkets and declined to oppose a proposal to allow foreign
investment in online shopping.
Instead, he urged small traders to improve their own quality
to compete better and said they could enter into contracts with
big online retailers to create "virtual trade".
"We should not worry about the challenges from global
trade," Modi told the Confederation of All India Traders. "The
government should not look to curb online trade. We should not
worry about these things. Our children have taken IT to the
world. We'll have to embrace it."
Later, Piyush Goyal, a member of Modi's economic planning
team, said the party's policy had not changed.
Prime Minister Singh threw open India's $500-billion retail
industry to foreign investors late in 2012, allowing chains such
as Wal-Mart and TESCO to own majority stakes in
Indian stores for the first time, subkect to approval by
This month, the newly elected BJP government of Rajasthan
decided to maintain the ban on foreign chains, the second state
to do so. Fewer than half of India's 28 states have agreed to
implement the policy.
India's small traders had hoped Modi would vow to make
opposition to foreign retailers a part of the party's manifesto,
due to be released in the next few weeks.
Many large Indian retailers, some of them
capital-constrained, welcome liberalised investment rules that
would bring funding and technology into the sector
Kishore Biyani, chair of the large diversified Indian
retailer Future Group, said: "This looks like a strategic
direction which is being set ahead of the elections and it's a
very welcome one."
"These comments and clarity will help everyone in the
industry and foreign players to take decisions."
In his speeched Modi also said he wanted more investment in
areas such as biotechnology and renewable energy and said he
favoured introducing a nation-wide goods and services tax (GST),
a long-planned reform to create a uniform market, cut business
costs and boost government revenue.
State governments, including Modi's Gujarat, have resisted a
GST, fearing that they would lose revenue if the current array
of levies were replaced.