India’s cabinet has relaxed rules on foreign direct investment in the country’s retail sector. The move was lauded by global retailers but met with opposition from large sections of the parliament, because foreign companies can now own 51% of multi-brand retail stores. In this special quote unquote, just-food outlines the thoughts of those affected by the announcement.
“It’s still an ongoing process but we are very pleased with the Indian government’s decision because we think it’s going to modernise the food supply chain and fight back against inflation, benefiting Indian consumers. We are happy to be able to work with retailers there, as we are doing in every country” – a spokesman for Carrefour outlines the company’s perspective on potential benefits for the Indian consumer.
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“Metro Cash & Carry runs self-service wholesale business and the current regulations in India already permit 100% FDI in the wholesale cash-and-carry sector. Therefore Metro Cash & Carry sees no impact on its wholesale operations. Metro Group nevertheless welcomes reforms opening the Indian market to international retail companies as we have always stated that we welcome liberalised and free markets, as these are preconditions for economic growth” – A spokesperson for the Metro Group said it’s business as usual for the cash-and-carry retailer.
“We believe that these changes are good news for the Indian consumer, good news for the retail industry and good news for suppliers and manufacturers. International retailers will bring further investment and experience to our growing retail industry. Competition is good for business, with the best companies growing stronger” – Mark Ashman, CEO of major Indian retailer HyperCity.
“Allowing foreign direct investment in retail would be good news for Indian consumers and businesses and we await further details on any conditions. We already have a franchise arrangement with Tata’s Star Bazaar stores. Learning about India and serving more customers every month is a win-win for customers, suppliers, Tesco and Tata” – a Tesco spokesperson is optimistic about the news.
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“This will….remove structural inefficiencies in the supply chain and benefit consumers in terms of cost and quality. Large investments in infrastructure will lead to rise in farm productivity, manufacturing, food processing and cold storage, thereby leading to less wastage, growth in employment, exports and GDP. [However], Indians love to buy and cook fresh and they will continue to visit their regular local market vendors and vegetable vendors to take care of their daily needs. Secondly, there are no large spaces available for large box retailers to enter the most crowded catchments within most of the big cities at reasonable rentals” – Mr Govind Shrikhande, managing director of Shoppers Stop thinks the policy will positively impact both multi-brand outlets and small retailers.
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By GlobalData“We thank the Government of India for allowing 51% FDI in multi-brand retail, giving us the opportunity to serve Indian customers directly. This change in policy is a good start to a win-win decision for all stakeholders, including the customers, farmers and the Government of India. We will create thousands of jobs through inclusive growth, increase farm productivity and income and help small and medium industries prosper and grow with us” – Doug McMillon, president and CEO of Wal-Mart International, confirms the company’s interest in India.
“If Walmart tries to open its mall anywhere I will burn it myself” – Opposition party leader Uma Bharti, as reported by NDTV following the announcement.
“Now that the policy has been announced, taking it back will be a big issue, with India global credibility taking a hit. I do feel that stringent conditions need to be put in place so that benefits can percolate to the farmers, SMEs and consumers. The concerns of the many political parties are not completely wrong and need to be taken into consideration. [However], Experience has shown that even if large format stores have been opened by the likes of Reliance, the impact on small shops have been marginal. In India (and other) south Asian countries, they co-exist while fulfilling complementary consumer needs. Overall there won’t be any fantastic action in the coming few months as companies will wait for political stability around the issues” – Zahir Abbas, associate vice president of Indian food and beverage industry consultancy Technopak.
