"It is a welcome development. We fully support the government on the issue. The country needs to move forward. We need to send a strong signal to foreign investors," said FICCI President R V Kanoria.

Expressing similar sentiments, CII Director General Chabdrajeet Banerjee said: "It is an important thing. It will boost the government's confidence to implement key economic reforms. This move would definitely help the government in passing the other important and pending reform measures very quickly."

Retailers Association of India also hailed the development saying it is "a big positive step".

"This is one more step towards encouraging those who have been sitting on the fence to invest in India," Retailers Association of India CEO Kumar Rajagopalan said.

He, however, said there were other issues, like not all states allowing FDI in multi-brand retail, which need to be resolved for more foreign investments to come in the sector.

Pantaloon Retail India Joint Managing Director Rakesh Biyani said: "This is a welcome development and we hope that the policy will be implemented soon. FDI will be good for the Indian retail sector."

The decision to allow FDI in multi-brand retail got the approval of the Lok Sabha as the Opposition motion seeking immediate withdrawal of the decision was rejected convincingly as BSP and SP walked out.

218 voted in favour of the Opposition motion, while 253 voted against it in the House where 471 members participated in the voting. The total strength of the House is 545.

Assocham President Rajkumar Dhoot said that the move "would become a milestone in the economic reforms saga. The economy in particular and the nation as a whole will derive lot of benefit from this move."