Do not think that this would have a major impact on the domain industry. If FDI was allowed then it would have been a positive sign for domain industry (more domains sold and regged and possible increase in value for shop,retail related domains and websites). Not speaking for any other segment as I do not know the full macro economic implications.
Its not a big deal- when there is demand, someone will supply and there is demand still in India. Greedy multinational corporations just trying to suck out $$$ from India. I do like the fact that INdian govt wants India protected for Indians, not some obscure, aggressive foreign companies with all sorts of agendas...talk less about the cultural complications. THings arent just as simple as they look.
I don't think we in the US are 'better off' because of Mega-Marts.
The wholesale destruction of small scale US retail came with a whole host of unintended, negative consequences that we're only now BEGINNING to understand. India was smart to take a cautious approach regarding that enemy at the gate.
Then, there's the part of me that goes to India twice a year on business and weaves my way through the garbage, cows, street urchins, chaos, filth and stench and can't help but think anything is an improvement over that, Wal Mart or not...
Still, I think India is being smart about it. They want to get it right. They want 'modern India' to be modern, but they want it to still be India. They realize that mega-marts may destroy a large part of their character. I don't blame them for not wanting them in.