Ar­eas of Con­cerns

Cargo Talk - - Guest Column -

In spite of the high growth in the past decade and op­ti­mistic pro­jec­tions, in re­cent years there have been some ar­eas of con­cerns. The GDP growth rate has slowed down and the re­tail growth has also slowed down. AT Kear­ney in its mar­ket at­trac­tive­ness in­dex for global re­tail­ers have down­graded In­dia sig­nif­i­cantly as an at­trac­tive re­tail desti­na­tion. In 2011, In­dia was ranked fourth world­wide (af­ter Brazil, Uruguay and Chile) and first among emerg­ing Asian mar­kets as an at­trac­tive desti­na­tion for for­eign re­tail­ers. How­ever, in 2013, In­dia slipped to the 14th po­si­tion while other de­vel­op­ing coun­tries such as Brazil and China con­tin­ued to be in the top­most des­ti­na­tions. The slow­down in the eco­nomic growth in the past two years and the slow pace of re­tail lib­er­al­i­sa­tion in In­dia may have ad­versely af­fected the at­trac­tive­ness of In­dia’s re­tail sec­tor.

The gov­ern­ment has opened up the re­tail sec­tor in a phased man­ner, but it has not been suc­cess­ful in at­tract­ing FDI. The FDI in­flow into this sec­tor is low and shows a fluc­tu­at­ing trend. The FDI in­flow in re­tail grad­u­ally in­creased af­ter the lib­er­al­i­sa­tion of the sin­gle brand re­tail pol­icy in 2006 and reached a peak in De­cem­ber 2010 ($229.1 mil­lion). It there­after de­clined sharply. By June 2012 re­tail FDI de­clined to $42.7 mil­lion with a share of only 0.02 per cent in to­tal FDI in­flows into In­dia and stayed at that level till Fe­bru­ary 2013. In March 2013, FDI in re­tail re­vived to $95.36 mil­lion with a share of 0.05 per cent in to­tal FDI into In­dia. Dur­ing the last two years, the gov­ern­ment has is­sued sev­eral no­ti­fi­ca­tions on FDI lib­er­al­i­sa­tion in the re­tail sec­tor - both for sin­gle and multi-brand re­tail, but the re­stric­tive­ness of the con­di­tions as­so­ci­ated with the FDI lib­er­al­i­sa­tion has made the pol­icy unattrac­tive. Specif­i­cally, for­eign re­tail­ers have raised ob­jec­tions to manda­tory back-end in­vest­ment re­quire­ments, re­stric­tive con­di­tions of sourc­ing from SME and re­stric­tions on e-re­tail­ing. Till date, none of the global multi-brand re­tail­ers have in­vested in In­dia af­ter the 2012 lib­er­al­i­sa­tion of the multi­brand re­tail pol­icy.

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