Chandigarh: A U.S. diplomat backed the Indian government's decision to allow 51 percent Foreign Direct Investment (FDI) in multi-brand retail, saying it 'makes sense' and will help bring down prices.

Charge d'affaires of the U.S. Mission Peter Burleigh, who was here to interact with participants of a Rotary Club event, noted that the fears, in several major economies such as China, that allowing FDI will 'badly impact' small traders in villages and towns had 'turned out to be not true' and the apprehensions 'not real'.

Backing the Indian government's decision, he said FDI in retail will help in bringing down prices of goods for the consumers but also provide 'good, stable' prices for the farmers for their produce.

But he added that the decision was purely of the Indian government, political parties and the people to make.

'On FDI in retail, very important economies, including China, are concerned that small traders in the villages and towns will be badly impacted, that they will not be competitive. But that has turned out not to be true, broadly speaking. I think that is an obvious concern, but I don't think it's actually real,' Burleigh said.

'If FDI are increased here by 51 percent or whatever it is, I don't think that we will see a difference or change with regard to the small 'kiranas' that exist all over the country,' he said.

'I think the record is very clear in countries that have gone in that direction... that prices for consumers will go down and you will have good, stable prices for farmers also over time,' he added.

Burleigh said the foreign companies would make 'guaranteed purchases' for several years and also pay a stable price for farmers' produce, even when prices in the global market fluctuated.

'This is obviously a decision for the Government of India, political parties and the people of India to make. But I think, both in the interest of the farmers and consumers, that this makes sense.'