The battle of FDI

Lately the rumour is rife that the Indian retail sector is all set to receive 100 per cent FDI in multi brand retail. What will be the fallouts and implications of this path-breaking decision if it comes through? How will the local Indian retailers deal with it? According to the reliable source from Department of Indian Policy & Promotion (DIPP), the policy maker may make it compulsory for the multi brand foreign retailers to create back-end cash & carry stores for small shopkeepers. As a result, an amicable situation will ensue where both the foreign retailers and local small retailers can co-exist. Also, procurement from local sources directly will ensure a fair deal for farmers and artisans. On the political front, however, finalising the decision is going to meet with severe resistance from opposition parties who view this leniency as anti-people that strengthens the clout of foreign retailers.

 

Those who stand by

For corporate retailers this relaxation is certainly a matter of rejoice as Mr Adi Godrej, the Chairman of the Godrej Group quips, “I favour opening up of the sector as it will lead to increased competition which will benefit the consumers.” Mr BS Nagesh, Vice Chairman, HyperCity Retail India Ltd, explains, “Since Indian corporate houses are also in retail so it will never be big vs. small. Retail is very capital-intensive that requires 5-7 years to break even so restriction on the basis of colour of money will not do any good to the Indian retail. Also, in a competitive market, this will ensure better control of price.”

 

On a cautious note

The note is slightly different as Mr Balvinder Singh Ahluwalia, President, Koutons Retail India Ltd. puts, “I believe this should be done in a phased manner or the government should put a cap on FDI as it is done in single brand retail. Moreover, the interests of indigenous retail industry should be kept in mind and it should be done in consultation with indigenous players.”  The same is reiterated by Mr Anupam Bansal, MD, Liberty Retail Revolutions Ltd who refutes, “No, I must oppose to 100 per cent FDI in multi-brand retailing in India, and rather prescribe for 51 per cent foreign equity in multi-brand retailing as in case of single brand retailing, a move that should pave the way for domestic players as well as foreign investors to set up their operations jointly that will attract foreign capital along with better quality products and services for the consumers.” He opines that being at the initial stage of organised retail, Indian retailers need some more time to create a space and be mature enough to face competition from the foreign players.

Mr Raghu Pillai, ex-CEO of Reliance Retail says, “The FDI in B2C retail should clearly specify the timelines / milestones and also adequately address India’s interests under mode 3 and mode 4 of WTO negotiation protocols”.   So it is in coming times to see how the government is handling the situation and how the implementation of the policy is actually pushing the retail industry further ahead.

 

 

 

 

“I favour opening up of the sector as it will lead to increased competition which will benefit the consumers.”

Adi Godrej

Chairman, Godrej Group

 

“Retail is very capital-intensive that requires 5-7 years to break even so restriction on the basis of colour of money will not do any good to the Indian retail.”

BS Nagesh

Vice Chairman, HyperCity Retail India Ltd.

 

“The FDI in B2C retail should clearly specify the timelines / milestones and also adequately addresses India’s interests under mode 3 and mode 4 of WTO negotiation protocols.”

Raghu Pillai

ex-CEO, Reliance Retail

 

“I believe this should be done in a phased manner or the government should put a cap on FDI as it is done in single brand retail.”

Balvinder Singh Ahluwalia

President, Koutons Retail

 

“Rather prescribe for 51 per cent foreign equity in multi-brand retailing as in case of single brand retailing, a move that should pave way for domestic players…”

Anupam Bansal

MD, Liberty Retail

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