India has approved long-awaited proposals to open the retail market to global supermarket chains.
Officials have agreed to 51% foreign ownership of multi-brand retail stores, allowing groups like Wal-Mart and Tesco to open stores.
Such operators currently can only sell wholesale in India and not directly to customers.
A BBC correspondent says the change will shake up India's retail industry.
Various industry bodies say competition will be healthy and the move will help revolutionise the way Indians buy and sell.
However, local businesses are expected to be cautious about the way foreign business are welcomed in India and the impact on local economies.