Sunday, November 27, 2011: 10:47:32 PM

Retail Poll Feature

Single brand retail looks ready to go

Government reveals that lot of foreign investors and stakeholders have shown keen interest to enter the market after removal of 51% cap

For a retail sector as dynamic and massive as India’s, caps on FDI in single and multi-brand retail are only treated as wet blankets. The scenario looks all set to change as the government has shown serious intentions of opening up the two sectors to FDI. While entry of FDI into multi-brand retail seems almost inevitable now, the raising of the cap of 51% on single brand is also likely to happen soon.

 
A recent survey by Retailing360 saw voters unanimously voting in favour of the removal of the cap on FDI in single brand retail. One of the biggest advantages of this will be felt by the middle class shopper as more foreign brands in the market would mean more competition and therefore competitive pricing and price wars.
 
International retailers keen
 
The government has revealed that foreign players are keen to enter the market and have asked for the cap on single brand retail to be removed. Minister of State for Commerce and Industry Jyotiraditya Scindia said in a statement that the government has received a number of suggestions on the matter from stakeholders and potential investors from Europe as well as the US.
 
Reports indicate that some of the bigwigs in the retail chain industry have been eagerly awaiting the opening of the retail sector in India. Prof. A Ramaswamy Iyengar, faculty - Retail, Welingkar Institute of Management Development and Research, Mumbai, explains, “FDI in single brand would mean more money and more technical know-how into the Indian retail sector. However, the actual impact of the opening up of the sector will be understood in 5 years’ time.”
 
With the average consumer and retailers ready to welcome more FDI in single brand retail, it is clear that it is a matter of time before the government announces a raise or removal of the FDI cap on single brand retail. Multi-brand retail on the other hand still seems immersed in controversy with several industry bodies and states going against it. Thus, a decision on this seems unlikely in the near future.

Tias Chakraborty

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