100% FDI rule in retail welcomed by most brands & retailers
By Satarupa Chakraborty | January 12, 2018
Though it receives a mixed bag of opinions, 100% FDI rule in Single Brand retail satisfies most of the stakeholders relating to the retail landscape here in India.
In what can be touted as a welcome step and significant reform on FDI in Retail, the Central Government has approved 100 per cent FDI in Single Brand Retail Trading (SRBT). Hitherto, only 49 per cent FDI was allowed under automatic route in SBRT. Investment beyond that required Government approval. Furthermore, local sourcing norms have been relaxed for a period of five years. The new rule has got mixed opinion from the industry bodies.
The Confederation of All India Traders (CAIT) strongly opposed the move as they opined that it will facilitate easy entry of MNCs in retail trade of India and will also violate poll promise of BJP. In a statement shared with media, CAIT mentioned, “It’s a serious matter for small businesses. It is a pity that instead of formulating policies for the welfare, upgradation and modernisation of existing retail trade, the Govt is more interested in paving way for the MNCs to control and dominate the retail trade of India.”
On the other hand, international and Indian brands welcomed the move as they could foresee more flourishing business in India, after the step is taken. Media reported that brands like Apple and its Chinese counterpart brands are likely to do better business in this country. Echoing their thoughts, retail real estate major CBRE’s Chairman, India and South East Asia, Anshuman Magazine, said, “This is great news for the retail industry in particular and India’s economy as a whole. The recent policy reforms and regulations have revived India’s profile as an investment destination. India’s retail market has been performing well over the past two years, attracting significant investment from private equity firms. With this announcement, global investors will have the opportunity to invest into what is one of the fastest growing economies in the world.”
Reflecting the industry’s collectively positive opinion, Kumar Rajagopalan, CEO of Retailers Association of India (RAI), mentioned, “We have always been supportive of relaxation of norms for FDI in retail. It will pave a smooth way for India’s retail sector to grow further. It is known that global companies take time to develop good suppliers as partners and hence the relaxed time frame for sourcing is conducive without compromising India's need to be a good sourcing hub for global brands. In the long run, today's reform would help boost employment, bring in wide product choices for consumers and help grow not just the economy, but the nation as a whole.”