FDI Retail – A WIN-WIN for East and West (Part-II)


By- Vavani Sarmah

In November last year, the government had withstood to pressure from TCP, BJP and other parties and held back notification of rules permitting 51% FDI in retail. India is already little late in this process. In my column in December 1 2011, I was writing why FDI is important to maintain the steady growth in Indian economy. After lots of hassles and tassels for a year, GoI finally agreed to allow FDI in multi-brand, the most controversial area in India. The decision will go live immediately and take effect which is very important at this time to maintain a steady growth.

Walmar Store complex“As a result, any foreign owned retail outlets such as Wal-Mart, COSTCO, and TISCO etc. may able to set up retail outlets in those States\UTs which have agreed, or agree in future, to allow FDI in MBRT (multi-brand retail trading) under this policy”. Even though BJP and other few parties against this provision and arguing that small time retail store in every corner of the street, villages and town will having hard time to compete with such giant big time retail play and create lots of people out of job. This may be true in some extend, but, the benefits of this provision will be enormous not only in long term but also in short term.

One of the most important aspects of this notification is that, the amount to be brought in by the foreign investor would be minimum USD 100 million and retail outlets must be set up only in cities that has more than 1 million populations.”

Another important aspect of this provision is that at least 50 per cent of FDI-Retail must be invested in back-end infrastructure such as infrastructure development, supply-chain, local produces etc. within three years of the first tranche. This will help local economy tremendously.

Also, this is very important-why-these provision will not only help improving life style of urban population but also bring development to other section of population. For the first time, people in those cities will experience real one stop solution in retail shopping for everything (which is very important) and will able to save lots of their time in their busy life. Time is money in this century. Competition will increase thus the quality of service and price will decrease. Needless to say that un-organized retails section will get a path to become organized sector to meet 21st century need. Local firms and entrepreneurs will get opportunity to expand business and able to connect Global retail market sector. This is very much similar to the tea industries in 16th centuries where there was no real tea Garden. British companies created the opportunities and started organized tea cultivation and become big time tea garden in today’s world. Retail sector will generate lots of direct and in-direct employment. On top of that, FDI-in-Retails will help developing little township inside those cities and help establishing other smaller stores such as restaurant, beauty salon, coffee-Tea shop etc. new opportunity for new business.

About the Author: Vavani Sarmah (Seattle, Washington) is a renowned professional and entrepreneur with over 15 years of experience in industry. In 2005, he started Rangoli Bazar a Food and Groceries retail store in Philadelphia. Since then he is holding and associated with different organization. Currently he is holding the CEO position at ClearWin Technologies (www.ClearWinTech.com ). He can be contacted at +1-408-891-6687 (vavani@wharton.upen.edu  or at Vavani@clearwintech.com )

You might also like

FDI Retail – A WIN-WIN for East and West (Part-II)

By: S Kumar Deka Read time: 10 min