"We welcome the Indian parliament's decision to allow Foreign Direct Investment in multi-brand retail," the US State Department spokesman, Mark Toner, told reporters at his daily news conference on Friday.
"As Indian officials have pointed out, FDI can create opportunities for small businesses, for farmers, spur investment in infrastructure and bring benefits to consumers as well as lower food prices," he said.
"We believe direct foreign investment in retail will grow markets in India as it has in China, Brazil and many other developing economies," Toner said in response to a question.
A number of US firms, he said, are keen to invest in the retail sector of India.
"There was a political process that played itself out. All sides had a chance to express their views, whether for it or against it, and it was approved," the US official said.
In a statement, the US-India Business Council (USIBC) applauded the Parliament's passage of allowing 51 per cent FDI in the country's multi-brand retail sector.
This will usher in much needed investments and expertise into supply chain development that can more efficiently link farmers directly to markets, thus minimising loss due to inadequate storage and transportation facilities, said Ron Somers, the USIBC President.
"FDI in multi-brand retail will support the government's goal of achieving remunerative prices for farmers, and will also increase quality and choice for India's increasingly sophisticated consumer base," he said.