Retail Reforms Open Up Opportunities
India has emerged as the fifth most favourable destination for international retailers, outpacing UAE, Russia, Indonesia and Saudi Arabia, according to A T Kearney's Global Retail Development Index (GRDI) 2012. "India remains a high potential market with accelerated retail growth of 15-20 per cent expected over the next five years," highlighted the report.
Organised Retailing
Glamourous and spacious malls are the new face of the Indian retail industry. Organised retail is changing the old shopping norms of the traditional unorganised stores, which tied the domestic shoppers for long. The growth of retailing in India is marked by the entry of formats like departmental stores, hypermarkets, supermarkets, speciality stores and Western-style malls. With multinational retailers to open stores in India and debut with huge investments, they all translate into increased manpower requirement. “Around 60-80 lakh new retail industry jobs will be created in the next five years’’ according to Aman Minocha, Head Operations & Management at PAN India level in UEI Global Institutes.
Government Initiative
Organised Retailing
Glamourous and spacious malls are the new face of the Indian retail industry. Organised retail is changing the old shopping norms of the traditional unorganised stores, which tied the domestic shoppers for long. The growth of retailing in India is marked by the entry of formats like departmental stores, hypermarkets, supermarkets, speciality stores and Western-style malls. With multinational retailers to open stores in India and debut with huge investments, they all translate into increased manpower requirement. “Around 60-80 lakh new retail industry jobs will be created in the next five years’’ according to Aman Minocha, Head Operations & Management at PAN India level in UEI Global Institutes.
Government Initiative
- Till now foreign direct investment (FDI) up to 100 per cent was allowed for cash and carry wholesale trading and export trading under the automatic route and FDI up to 51 per cent was allowed in single-brand products. However, the Government recently passed a cabinet note and permitted FDI up to 51 per cent in multi-brand retailing with prior Government approval and 100 per cent in single brand retailing, thus further liberalising the sector. This policy initiative is expected to generate lakhs of additional retail industry jobs in India, as per global human resource consultancy, Mercer
FDI in multi-brand retail
The much-awaited FDI policy for multi-brand retail has passed the hands of the Government. According to Government of India's notification on 20 September 2012, 51 per cent FDI in multi-brand retail is permitted, subject to certain conditions. Some of the top conditions cited are as follows:
- State acceptance: The stores may be set up in those states which allow FDI in multi-brand retail under this policy. Such stores will be subject to compliance with applicable state laws and regulations.
- Minimum investment: The minimum amount that a foreign investor has to invest is USD 100 million.
- Backend investment: At least 50 percent of the total FDI brought in shall be invested in 'backend infrastructure' within three years of the first tranche of FDI.
- Procurement: At least 30 percent of the procurement of manufactured/processed products purchased shall be sourced from 'small industries' globally, with investment in plant and machinery not exceeding USD 1 million.
- Location: Retail sales outlet may be set up in cities with populations of more than 1 million, according to the 2011 Census and may also cover an area of 10 kilometers around the municipal/urban agglomeration limits of such cities. Only 53 cities in India qualify under this criterion.
- Agricultural produce: First right of procurement lies with the Government.
These conditions clearly indicate an opportunity for global retailers to harness the vast potential of Indian markets. The development is likely to generate increased retail management jobs in both rural as well as urban centers.
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