background image
F A L L 2 0 1 2
55
been made subject to further conditions
in addition to the aforementioned already
existing conditions:
·
Overseas retailers who want to invest
in single brand product retail trading
in India beyond 51 percent will have
to source 30 percent of their goods
from "Indian" small industries, vil-
lage industries and cottage industries,
artisans and craftsmen.
Some of the objectives that the Indian
economy seeks to gain with such relax-
ation are:
·
Attracting investments in production
and marketing;
·
Improving the availability of such
goods for the consumer;
·
Encouraging increased sourcing of
goods from India;
·
Enhancing competitiveness of Indian
enterprises through access to global
designs, technologies and manage-
ment practices.
why India?
Indian organized retail industry is one
of the fastest growing sectors with huge
growth potential. Total retail market in
India is estimated to reach USD $573
billion by 2012-13. Organized retail
industry accounts for only 5.5 percent of
total retail industry and is expected to
reach 10 percent by 2012.
2
Foreign companies' attraction to India
is the billion-plus person population.
Also, there are huge employment
opportunities in the retail sector in India,
not to mention cheaper procurement and
labor. India's retail industry is its second
largest sector, after agriculture, which
provides employment. There is a huge
industry with hardly any large players. In
addition to these factors, improved living
standards and continuing economic
growth, friendly business environment,
growing purchasing power and increasing
number of conscious customers aspiring
to own quality and branded products in
India are also attracting global retailers
to enter the Indian market.
right time to tap the
Indian market
India has emerged as one of the prime
destinations for the investment of funds
from an impressive number of foreign
investors. Undoubtedly, with the further
relaxation in the FDI norms, there is a
lucrative opportunity for foreign players
to enter one of the biggest territorial mar-
kets and reach out to a large customer
base. It is also imperative that the play-
ers participate in market expansion by
getting introduced in the Indian markets
sooner than their competitors.
The growth rate trend of the Indian
industry together with the changing con-
sumer inclination (such as increased use
of credit cards, brand consciousness and
the growth of population) are factors that
encourage a foreign player to establish
outlets in India and tap the huge Indian
market.
At present, most major global brands
and retailers who are not yet in India are
assessing the Indian market with keen
interest, recognizing its strengths as a
retail destination. It is widely speculated
that major brands like Pavers England,
Ikea, Gap and Starbucks, etc. have either
already set the machinery running in or-
der to make a timely entry in India or are
seriously considering making the move.
Furthermore, international brands that
had already partnered with an Indian
partner now can go solo without diluting
their stake in the Indian market.
With the relaxation of norms, opening
up of the market and pro-investment
attitude of the government, this is the
ideal time for prospective foreign players
to make an earnest start in a major retail
market, as India has finally stepped be-
yond the brink of further liberalization.
1 http://dipp.nic.in/English/acts_rules/Press_Notes/
pn1_2012.pdf
2 http://business.rediff.com.