They came, they saw, but are yet to conquer. Retail sector, which was touted as the next big game-changer, is yet to meet its saviour. And with the BJP vociferously opposing foreign direct investment in retail, the sector seems to be going slow in attracting new foreign investors.
However, home grown retail brands are still gung-ho about growth as mall-hopping consumers shape up the industry.
Nirmala Sitharaman, Minister for Commerce and Industry, has made the BJP’s stance clear on FDI in retail.
“We are absolutely clear that we do not want FDI in multi-brand retail...” she said, adding that the party will stick to its election promise.
But according to J Suresh, Chairman, Retail Committee CII and Managing Director of Arvind Brands, retail is not an open-and-shut case.
“We strongly believe that the Government will look at it at a later date, once they see accrued benefits such as employment and contribution to the GDP,” he said, adding that the need of the hour is to create demand through economic growth.
Suresh noted that the industry is seeking more foreign institutional investor (FII) participation in retail, as it will ease the fund crunch especially for unlisted retailers. Additionally, we are expecting some clear indication on the roll-out of the GST (Goods and Service Tax). This will help in uniform taxation across States and also ease the service tax pressure, he said.
Retail industry agrees with Suresh as they see the opportunity to grow immense. The reason for this optimism is the penetration of organised retail as a category.
According to various estimates, India’s entire retail market stands at a mere seven per cent compared to nations such as Brazil (35 per cent), China (25 per cent) and Japan (66 per cent). The total size of the organised retail is estimated at $494 billion.
Another landscape in retail which is fast evolving is e-commerce. Interestingly, the government is keen to open up the e-commerce category.
Real estate, too, seems to be attracting real estate players. Despite challenges such as high rental and lack of quality retail space, brands are still attracting behemoths such as H&M and Uniqlo, among others.
Real estate consultant, CBRE, in its study, notes that US brands accounted for the bulk of global retailers present in India.
This was followed by Italian and UK brands which accounted for 19 per cent of the brands.