Pro-MNC consultant praises Modi for opening up India's $1 trillion retail market for foreigners, ranks India No 2
Top international consultant, Chicago-based AT Kearney, known to take care of the interests of multinational corporations around the globe, has praised Prime Minister Narendra Modi's governance for ensuring what it calls “foreign retailers’ increased optimism in the $1 trillion retail market and its vast potential” in India.
Ranking India No 2, next only to China, in the Global Retail Development Index (GRDI), the top consultant, in their latest report, “Global Retail Expansion at a Crossroads ”, has said that the retail demand in India has particularly gone up because the Modi government has “relaxed” several key foreign direct investment (FDI) regulations in “single-brand retail.”
The report's GRDI score is 71, less than two points behind China's – 72.5 – on a scale of 100, and the countries which are immediately behind India are Malaysia, scoring 59.6, followed by Kazakhstan 56.5, Indonesia 55.6, and Turkey 54.3.
Interestingly, India ranks so high despite its relatively low market size of 53 per cent, as against cent per cent of China, 81.3 per cent of Malaysia, 56.2 per cent of Kazakhstan, 64.2 per cent of Indonesia and 85.9 per cent of Turkey. The report only ranks developing countries, leaving out developed nations.
In Inda, the report says, “companies that deal with 'cutting-edge technology' are no longer forced to source at least 30 percent locally, a move that will likely encourage companies like Apple and Xiaomi to open branded stores in the near future.”
The ruling BJP has “retained a rule that allows 51 percent FDI in multi-brand retail, and has opened up FDI in multi-brand processed food retail, as long as the food is sourced and produced in India”, the report stays, adding, “This could benefit retailers like Walmart (currently limited to cash-and-carry) and Tesco (currently operating multi-brand retail through a joint venture with Tata).”
“In terms of formats, the cash-and-carry model is thriving and profitable, with existing players like Walmart and Metro seeking to expand their store bases, targeting 70 and 50 stores, respectively, by 2020”, the report says.
Thanks to FDI relaxation, the report says, in the past year, several foreign retailers have entered India – such as in fashion, Aéropostale, The Gap and The Children’s Place in partnership with Arvind Lifestyle Brands, Topshop and Topman entering via e-commerce through Jabong.com, and H&M “becoming the first international fashion retailer to enter alone after the government approved 100 percent FDI in single-brand retail.”
“Other sectors also saw multiple entrants including sports (Sonae, under the Sport Zone banner), restaurants (Wendy’s, Jamie’s Italian, Jamie’s Pizzeria, Barcelos, and Carl’s Jr), and convenience stores (UAE-based Fmart)”, the report notes, adding, “And among existing international retailers, Marks & Spencer, Burger King, Dunkin’ Donuts, Starbucks, and Nando’s undertook significant expansion programmes. ”
“In addition”, the report says, “In e-commerce, the government now permits 100 percent FDI for online marketplaces... E-commerce is accelerating as Internet and smartphone penetration increases – toward the end of 2015 India surpassed the US to become the world’s second-largest Internet market, trailing only China.”
“Consumers are growing more comfortable shopping online, and venture capital and private equity firms are making investments”, the report notes, adding, “Attracted by the growth prospects, Alibaba plans to enter in 2016 either organically or through acquisitions.”
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