INDIA: India closer to easing rules on retail investment
By Petah Marian | 25 July 2011
India has come a step closer to opening up multi-brand retail to overseas operators after a key government committee approved an easing of rules on foreign investment.
A committe of secretaries agreed in principle to allow non-Indian retailers to own up to 51% of a multi-brand retailer.
The approval will not immediately open the doors to global retailers like Wal-Mart Stores, Carrefour and Tesco. Any plan to relax restrictions still requires the approval of India's Commerce Ministry and then the country's Cabinet, according to Indian business website CNBC-TV18.
At present, India allows foreign companies to own 51% of retail stores selling one brand like Marks and Spencer. The country also allows multinationals full ownership of wholesale stores, which is how the likes of Wal-Mart, Tesco and Metro Group have entered the market.
India has been debating whether to allow more foreign investment in the country's retail sector for a number of years, with the Finance Ministry releasing a report in 2009 arguing that rules should be eased.
Earlier this year, an Indian government panel also recommended relaxing the rules as part of attempts to battle high levels of inflation and to cut the margin between farmgate and retail prices.
A number of foreign retailers are already present in India, with Wal-Mart operating cash-and-carry outlets in partnership with Bharti Retail. Metro operates six wholesale stores and Tesco signed an agreement with Tata in 2008 to operate cash-and-carry outlets in the country.
Shares in the country's largest operator Pantaloon rose 1.82% on the news to INR338.2 a share, its highest price for the past six months. Meanwhile shares in Shopper's Stop were up 7.9% to a high of INR504.85 in today's trading.
Sectors: Emerging markets, Retail
Companies: Tesco, Wal-Mart Stores, Carrefour, Marks and Spencer, Metro Group
View next/previous articles
25 Jul 2011 -
25 Jul 2011 -
Currently reading -
INDIA: India closer to easing rules on retail investment
25 Jul 2011 -
Related research
UK Customer Insight 2011: Tesco - Food
UK Customer Insights 2011 are based around individual retailers and provide a highly detailed, data-rich overview of a retailer's customers, drawing on a nationwide survey of 6,000 shoppers each year. Discover the profile of the core shopper for Tesc...
Tesco China 2010: A Company Profile
Tesco, Carrefour and Wal-Mart are the three largest retail companies in the world, yet they compete directly in very few markets, and China is one of the few that they do. It is therefore perhaps surprising that Tesco entered the market so much later...
Tesco in Poland: Local Profile
This is a comprehensive report covering the company’s local operations. It also includes key financial and operational performance details of the company. In addition, the report presents the strategy of the company, market share and investment plans...
Related articles
Read more on this hot issue
India set to relax retail rules
After years of speculation and fierce debate, India looks set to ease restrictions of foreign investment in its booming retail sector. Business organisations and multinationals have welcomed the decision, although there remains some local opposition.
There are currently no comments on this article
Be the first to comment on this article