100% FDI In Single Brand Retail – Retailers Rejoice, Trade Body Opposes!
After the government announced 100% FDI in single-brand retail, there are two conflicting views on this news, and both sides are adamant that they are right.
Yesterday, we had described the Govt move to allow 100% FDI in single-brand retail as a historical moment for businesses, all over the country. After this decision, foreign firms can easily, seamlessly invest or collaborate with Indian firms, or open their own outlets without any prior Govt. approval.
However, after 24 hours of this announcement, we are receiving mixed responses to this news.
While Retailers Association of India, a strong association of 1000 members representing 5,00,000 store outlets have expressed their joy over this decision, The Confederation of All India Traders (CAIT), a powerful lobby of traders and small businesses have vehemently condemned this decision.
As per CAIT, 100% FDI into single-brand retail will harm small businesses, and this is against what BJP Govt. had promised in their manifesto.
What is the truth here?
Retailers Association Of India: This Is An Excellent Step
Kumar Rajagopalan, who is the CEO of Retailers Association of India (RAI) has appreciated the Govt.’s decision to allow 100% FDI in single-brand retail.
In an email response, he said
“We at the Retailers Association of India (RAI) have always been supportive of relaxation of norms for FDI in retail. We believe that the current decision to allow 100% FDI through automatic route will ease the process for foreign as well Indian brands interested in being part of the Great Indian Retail Story.”
As per Rajagopalan, this decision to allow 100% FDI will not only boost employment pan-India, but also enable more choices for the customer and help to “grow not just the economy, but the nation as a whole.”
Besides, RAI is also pleased that the relaxed time frame for procuring raw materials from India will help global suppliers and businesses to settle in, and optimize their business operations.
Echoing similar vibes, Anup Jain, managing partner at consumer and retail consulting firm Redback Advisory Services said that this move will help the Govt. to organize the retail sector, which is clearly unorganized right now. Only 9% of retail comes under organized sector as of now, and 91% is unorganized.
Slamming those who say that small businesses will get harmed, he said,
“Protectionism that we have been practising so far only hampers the flow of financial capital which will no longer be the case,”
Last year, India received FDI worth $60 billion, which is an all-time high. Now, after 100% FDI approved, this will only go up. Ikea, H&M are some of the brands which have made use of the 49% FDI window earlier and set up their shops in India.
CAIT: This Will Destroy Small Businesses
Meanwhile, The Confederation of All India Traders (CAIT) has expressed their strong displeasure over Govt. of India’s move to allow 100% FDI in single-brand retail.
In a scathing attack on Govt., CAIT said in a press statement:
“100 per cent FDI in single-brand retail through the automatic route will facilitate easy entry of MNCs in the retail trade and also violate the poll promise of the BJP.”
Besides, they also termed this development as “serious matter for small businesses”, which can hamper their growth and development; and described the move as “brutal move” by the present Govt.
Supporting CAIT’s views on the matter, Anil Talreja, partner, Deloitte Haskins & Sells LLP has said that 100% FDI in single brand retail doesn’t matter much now, as most of the brands who wanted to come to India has already arrived.
He said,
“There won’t be much money or investment for it will all depend on the business model.”, adding, “Those who want to come to India have already done so. Many others have opted for the franchise route or done it through partnership,”
Clearly, there are two conflicting views on this news, and both the sides are adamant that they are right.
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