New Delhi: Reliance Industries, India''s biggest private sector firm, plans to lay off 1,000 staff in Uttar Pradesh, after attempts to reopen its organised retail supermarkets failed after violent protests from small traders and local lobbies.

Reliance has a 2,800-strong workforce in Uttar Pradesh, and the thousand headcount would put the layoff at a drastic one-third.

According to company sources, termination notices have been issued to around 1,000 staff of the venture, which termed the move as a critical situation. Downplaying the finality of its exit from the state, the company reportedly said that it does not have plans to leave the state, but has frozen all its plans.

Last month the Uttar Pradesh government had ordered the company to shut down 10 ''Reliance Fresh'' supermarkets, citing law and order problems, after violent protests from traders fearing loss of profits and the threat of the competition. The company so far has had no success in persuading the state government to reopen the stores.

Another 15 Reliance stores in Noida and Ghaziabad have also been asked to shut down last week, on orders from the police, though staff there have not yet been given the pink slip. Orissa in Orissa too ransacked two stores, prompting police to order their closure

Reliance Retail had planned to invest over $5.5 billion in its retail venture, which would see a combination of retail formats that include hypermarkets, supermarkets, discount and department stores.

Others who have seen some friction with these bodies of thought have been the Wal-Mart Bharti combine, who had to endure some political uncertainty before they could actually make way into the Indian retail space. Global retail giants Carrefour and Tesco have shelved their plans to invest in India amid the uncertainty.

A few other local retail chains operate numerous stores throughout the country without as many protests. Kishore Biyani''s Future group, Subhiksha and Spencer''s have had operations in this format long before Reliance, without encountering major problems.

However, Reliance''s retail format under the ''Reliance Fresh'' brand of a small convenience store positions it in direct competition with neighbourhood kirana stores, as well as small time fruit and vegetable vendors.

Large retailers account for just about 3 per cent of India''s $350 billion retail market., which analysts expect would double by year 2015, that could still leave 94 per cent of the market, as it presently is.

Observers feel that Reliance''s move to lay off staff could be leveraged as a tactical ploy to pressure the state government on reversing its views about shutting down the company''s operations.