SERVAL

Several stipulations in the existing FDI policy are acting as deterrents for global retailers

 

 

Several stipulations in the existing FDI policy are acting as deterrents for global retailers, say industry insiders. For example, the Department of Industrial Policy and Promotion (DIPP), the authority that frames FDI policy, stipulated that foreign retailers with plans to set-up multi-brand chains have to invest a minimum $100 million with 50 per cent of that amount spent in building back-end infrastructure such as warehouses and cold storage facilities. This proposal has upset retailers because investing 50 per cent in back-end operations initially is difficult when the focus has to be on increasing the store count to acquire scale. Harminder Sahni, Founder and Managing Director at retail consulting firm Wazir Advisors, says that it is not an attractive policy for retailers in its present form. "If the new

This appears unlikely after the elections given the opposition to the policy from most political parties. BJP is in favour of FDI in infrastructure and several other sectors but "we don't want FDI in multi-brand retail because that will save jobs in the manufacturing sector," says BJP spokesperson Prakash Javadekar. The main problem is the sourcing of products, according to him. "Global chains are expected to source their products from multiple countries which will lead to large scale job losses in manufacturing," he adds.

In the first week of April, the Bharatiya Janata Party (BJP) releasemd its election manifesto. The docuent confirmed the party's opposition to foreign direct investment (FDI) in multi-brand retail. This came close on the heels of the Aam Aadmi Party also declaring its opposition to the ruling Congress's showpiece reform. Indeed, among major political parties, Congress now remains the sole supporter of the policy.

retailers

This appears unlikely after the elections given the opposition to the policy from most political parties. BJP is in favour of FDI in infrastructure and several other sectors but "we don't want FDI in multi-brand retail because that will save jobs in the manufacturing sector," says BJP spokesperson Prakash Javadekar. The main problem is the sourcing of products, according to him. "Global chains are expected to source their products from multiple countries which will lead to large scale job losses in manufacturing,"

VIMAL SINGH
PGDM 1ST YR