It is true. Just look at what has happened in America. It is going to happen to India. There will be no small scale retailers once these companies get a foothold in India.
Edit: I don't think any good can come out of allowing these companies to destroy our market. It is going to happen. They have more money than most of us can ever count. They will go to any lengths to destroy the current market and establish themselves.
Moreover, these companies don't have the slightest honesty when dealing in India. I never shop from these stores because of the way they treat customers like criminals. They check your bag. Most of their offers have caveats that are never disclosed. They don't keep any change less than 10 Rs and give you toffee for ten rupees. I just hate these practices by these companies.
Moreover, the buying habits of people are already changing. I can tell you it is very common for people from my extended family to do grocery shopping of Rs. 2,000-3,000 when shopping in these big stores, whereas previously they would never shop more than Rs. 500-600 in one go.