Oct. 10 (Bloomberg) -- Thousands of small shop owners, street vendors and workers protested in Mumbai today against the entry of companies such as Wal-Mart Stores Inc. and the expansion of Reliance Industries Ltd. in India's retail industry.

The protestors oppose the expansion of India's Reliance and Bharti Group into retailing and are against foreign investment in the sector, Vyapaar Rozgar Suraksha Kriti Samiti, the organizer of the rally, said in a statement. Between 6,000 and 7000 people attended, Isak Bagwan, assistant commissioner of Mumbai police, said today.

Street vendors and family-run shops are trying to halt the advance of chain stores whose sales are forecast to increase more than eightfold to $97 billion by 2012. Today's rally may encourage the government to move slowly on easing rules that prevent Wal-Mart and Germany's Metro AG from opening stores.

``The government may succumb to the pressure created by these lobbies given that they are already in trouble with their communist allies and may not want to annoy them further,'' said R.K. Gupta, who manages $75 million of stock at Credit Capital Asset Management in New Delhi.

The Vyapaar Rozgar organization, which represents about 750 unions and small business associations, yesterday forecast as many as 100,000 people would attend today's rally.

Foreign Ownership

The federal government, which is seeking to ease overseas investment rules in the retail industry, allows up to 51 percent foreign ownership in companies that sell a single brand.

India bars foreign investment in multi-brand retailers, preventing Wal-Mart, the biggest retailer globally, and Carrefour SA from opening consumer outlets in the world's second- fastest growing major economy.

In August, Wal-Mart and New Delhi-based Bharti agreed to set up wholesale stores and a supply chain unit. Edelman, the public relation agency the represents Wal-Mart in India didn't immediately provide a comment today.

India's Mahindra group, which owns the country's biggest tractor and sports-utility vehicle maker, today said it plans to enter into the retail business. The company didn't provide further details.

The Uttar Pradesh state government ordered the temporary closure of Reliance stores in two cities after a group of traders ransacked some of the company's outlets on Aug. 22.

Stores owned by Reliance and Subhiksha Trading Services Ltd. have also been vandalized in the eastern states of Orissa and Jharkhand. In the southern province of Kerala, the state government plans to restrict the number of stores that big companies can open.

Strike Threat

``We will give the central government till Jan. 26 to respond to our demands and if our demands aren't met, we will go for a nationwide strike,'' Mohan Gurnani, president of Federation of the Association of Maharashtra, an affiliate of Vyapaar Rozgar, told reporters in Mumbai today. ``The central government has to protect the livelihoods of nearly 50 million'' people employed in the retail sector.

Vyapaar Rozgar's demands also include a national policy on retail and a blanket ban on all big companies in retail and wholesale.

``The state governments of Kerala and Uttar Pradesh have shown political maturity and were quick to see the writing on the wall and pass laws curbing the entry and growth of corporations in the retail sector,'' the organization said earlier in a statement.

It has called for a termination of the license of Metro, which runs wholesale stores in India.

Store chains will account for about 16 percent of total retail sales in 2012 compared with 4 percent this year, according to projections by consultant Technopak Advisors Pvt.

To contact the reporters on this story: Saikat Chatterjee in New Delhi at schatterjee4@bloomberg.net

Last Updated: October 10, 2007 05:43 EDT