BOMBAY (AFX) - The government will soon allow foreign direct investment in the retailing sector, Financial Times quoted Prime Minister Manmohan Singh as saying.

'There are many fears, particularly among small traders and small shopkeepers, but I believe we can soon move forward,' Singh told the paper after an informal meeting with foreign journalists in New Delhi yesterday.

Pressed as to when the government might act, the prime minister said: 'Hopefully this year.'

Singh's comments came days after he met John Menzer, president and chief executive of Wal-Mart's international arm, who was in New Delhi to discuss the US group's ambitions to enter the biggest emerging economy still closed to foreign direct investment in both food and non-food retailing, the paper noted.

'Wal-Mart will happen,' the paper quoted a senior government official as saying.

The official added that the cabinet might lift the foreign direct investment ban before Singh flies to the US for a meeting with President George W. Bush in July.

'I wouldn't be surprised if this happens before he goes,' he said.

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