New Delhi, Dec 2 (IANS) Defending the government's decision to allow foreign capital in multi-brand retail, Micro, Small and Medium Enterprises Minister Virbhadra Singh Friday said that it will not effect the small retailers like kirana shops.

"India has retailers in every village, city and they (multi-national retailors) cannot open so many stores. At the most there will be 50 stores which will not effect the small retailers," Singh said after inaugurating a franchise and retail based event here.

The development comes as the government is being criticised by the opposition and some of its own allies in the United Progressive Alliance (UPA) for allowing 51 percent foreign direct investment (FDI) in multi-brand and 100-percent equity in single brand retailing.

According to Virbhadra Singh, the entry of MNCs into the sector would not pose a threat to the small retailers in the hinterland as the FDI would only be allowed in cities with population of one million above, that too after the state government's permission.

"States which want FDI have the choice to give the permission, if they do not want too, they will not, there is no compulsion," he noted.

"FDI is going to help the country and the big retailers have to source 30 percent of all procurement from medium and small enterprises, this will create more employment," he added.

Singh inaugurated the ninth edition of Franchise India 2011 which comprises over 300 national and international companies from sectors spanning fashion, food, jewellery, real estate and retailers.

"This platform will also be launchpad for showcasing new collections and international products at the brand shows and will showcase consummate business opportunities and solutions for the franchise and retail sectors," the organisers of the event said in a statement.