FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.
In India there has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables but due to very limited integrated cold chain infrastructure farmers have to incur heavy losses in terms of wastage in quality and quantity of produce. This loss is quite substantial. Allowing FDI in retail would create better storage facilities and necessary logistics for preventing the wastage. Thus the bottlenecks in supply chain could be removed. The farmers and the consumers have been at the receiving ends. Intermediates dominate the value chain. It has been found that farmers receive only one-third of the consumer price of their produce. FDI in retail would not only bring the consumer prices down but also help in overcoming the vast difference between prices at the ‘farmgate’ and the ‘market place’. Owing to economies of scale adopted by big retailers farmers can expect a better pricing of their produce. Thus it would be a ‘win win’ situation for both the consumers and the farmers. Also the food inflation could be controlled, the government can expect better revenues, more employment and so overall greater GDP.
Ever since the opening up of the markets foreign investments have been integrating developing countries into the global economy benefiting both the developing country as well as the global economy as a whole. FDI can be a strong catalyst to increase competition in industries characterised by low competition and poor productivity. So why should retail be an exception. It makes better sense to allow FDI in multi brand retail. Countries like Brazil, China and Mexico have benefited by allowing FDI in retail sector without any limits on equity participation.
Keeping in mind the Indian socioeconomic factors certain safeguards need to be kept before bringing about the necessary policy change. First and foremost the opening up of the sector should be gradual ie a window of 3-5 years would give enough time to the domestic players to be able to face the international challenge competitively. In the initial stage FDI upto 49% could be allowed and not 100%. Thus the domestic players would be able to have access to investments and the best management practices while retaining management control. The government should ensure level field is so that both the organized and unorganized retail sector coexist. Also the government should make sure that the FDI makes a real contribution to address the inadequacies of back end infrastructure. The government should keep a check so that the companies donot adopt monopolistic practices. The government should prepare legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means. Fair play should be ensured.
FDI in Multi Brand Retail in India
FDI in Multi-Brand retailing is prohibited in India. FDI in single-brand retailing was permitted in 2006 to the extent of 51%. After the change in policy from April 2006 India received US$194.69 million till March 2010 which is 0.21% of total FDI inflows during that period. Single brand retail outlets with FDI generally pertain to high end products and cater to the needs of a brand conscious segment of the population. This segment is different from the one that is catered by small retailers/kirana shops.
India’s organized retail industry is one of the sunrise sectors with huge growth potential. India’s young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets are the key agents of growth of retail industry. Foreign retailers are making a beeline to enter and tap this vast and profitable market. However the government remains cautious in allowing the foreign players to enter the Indian market. In India, retail is the second largest employer after agriculture. The policy makers are apprehensive that allowing foreign companies would lead to unfair competition and could lead to large scale exit of domestic retailers, especially the small family managed outlets. This could lead to large scale unemployment. Also Indian retail sector, particularly organised retail, is still under-developed and in a nascent stage, so it is
important that the domestic retail sector is allowed to grow and consolidate first,
before opening this sector to foreign investors.