"This will further increase the confidence of the international investors in India and will also set up the pace for further opening of the retail sector," Anshuman Magazine, managing director, C B Richard Ellis South Asia Pvt Ltd said.
He said any increase in retail industry would have a multiplier effect in the economy as it would improve the quality and variety of products, keep prices competitive, expand manufacturing, besides generating employment.
In a major reform measure, the government allowed up to 51 per cent FDI in single brand like Reebok and Louis Vuitton.
"For the past few years India has come on the radar screen of international investors who have finally started investing in the country and steps such as these reiterate our country's seriousness in eventually making India a part of the global economic community," Magazine said.
The Cabinet decision of allowing FDI in retail up to 51 per cent, to be permitted with prior government approval, in single brand like Reebok and Sony would not displace or replace employment and rather encourage investment and create jobs, Commerce Minister Kamal Nath said.
"This is already present through the franchisee route and is different from the generalised retail, FDI in which was still under discussion," he said.
