Industry hails new foreign capital norms in retail

Mumbai, Jan 10 (PTI) Industry experts as well as thelargest trade body of retailers RAI have hailed the newforeign investment norms for single-brand retail whereingovernment today allowed automatic approvals for 100 per centforeign capital, as a positive step.So far, only 49 per cent FDI was allowed underautomatic route in singe-brand retail. Investment beyond thatlevel required government approval. Furthermore, localsourcing norms have also been relaxed for a five years."We believe the decision to allow 100 per cent FDIthrough automatic route will ease the process for foreign aswell domestic brands," Kumar Rajagopalan of the industry bodyRetailers Association of India (RAI) said in a statement.As global companies take time to develop goodsuppliers as partners, the relaxed time frame for sourcing isseen as "conducive" without compromising on the need to be agood sourcing hub for global brands, he added.Retailers will be able to start operations and willhave five years to find local partners and vendors thatqualify in terms of quality and price.As per industry estimates, the domestic retail sectoris pegged at Rs 1 trillion by 2020 at an estimated compoundedannual growth rate of 15 per cent.Aashish Kasad of EY India described the decision as aprogressive step that will help attract foreign investmentinto the sector.He, however, said industry is disappointed with nochanges in FDI norms for multi-brand retail which his neededto get latest technologies and retail formats. In the long-run, this reform is also expected to boost employment, bringin more products for consumers and help the economy.Neeti Sharma of TeamLease said the move will result indemand for emerging roles in technical development and supportfor online retailers, supply chain and logistics, and customerservice."To meet the increased job demand from companies, itis imperative that we focus on up-skilling the workforce andre-shape the learning and development initiatives," she said.The decision is also expected to boost the real estatesupply for this sector in the near future."After a prolonged period of slowdown in the retailsector over the past few years, we saw strong comeback withdevelopers and investors betting high on the sector. Retailsaw significant increase in PE investments in fiscal 2017indicating a significant growth in retail real estate in thecoming years and today's decision will further speed this up,"Pankaj Renjhen of JLL India said.With most economic agencies, including World Bank, S&Pand Moody's continuing to project over 7 per cent GDP growthfor the next three years (2018-20), the growth possibility forglobal retailers is strong here, he explained.However, Malav Virani of law firm MDP & Partners said the move is positive for only new comers, as for players like Nike, Ikea who are already present here will not benefit much due to the strict sourcing norms, which will continue to act as a deterrent in their faster expansion.

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