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Journalism of Courage
The limited foreign direct investment allowed by the government in the retail industry will not have much impact on the Big Bazaars and Shopper’s Stops but it will allow luxury brands like Marks & Spencer, Louis Vuitton or Versace — which are currently taking the franchisee route — to open more stores in the country.
Only those that run franchises for larger international brands need to be nervous about the change in FDI norms. Besides, though foreign brands are selling in India through the franchisee route, overnight decisions to set up company-owned company-operated (CoCo) retail outlets are unlikely.
Already, congratulations for a good start are being waved around in corporate circles, which hope to see the law on retailing relax even more.
‘‘The FDI gates opening up means that consumers will have access to more advanced and organised retail. A whole range of new products will be in stores that they don’t see today. Who knows what we too will do after the decision is finalised,’’ says Nokia’s India head Sanjiv Sharma.
In the short term, India is likely to leverage the opening up of retail to capitalise on sectors that supply to global markets. High fashion, design and lifestyle goods are likely to start being made in India.
‘‘If we can get luxury brands into the country, a lot of Indians who are shopping abroad can start shopping here,’’ adds B S Nagesh, CEO and MD of Shopper’s Stop.
Morever, local stores have not always been able to give Indian consumers an ideal retail experience. For instance, India does not have a single Nokia-owned showroom in the country as a result of which, products that require a particular environment never got the right setting to clinch a sale, says Sharma.
But corner stores need not panic already. Fairly large investments are required to make retail go global in India, which will come, but certainly not by just turning the policy switch to ‘‘off guard’’.
Many of the world’s top CEOs who visited India in the last six months asking the government to open up the sector are from the multiple brand malls like Wal-Mart, Carfood, Tesco and Metro Cash and Carry. This, say analysts, is the first step towards opening up the sector for all players in the future.
Among the opponents to FDI in retail, Kishore Biyani, managing director of Pantaloon Retail (India), says the move will have a limited impact on the country’s retail sector as only some luxury brands are likely to take advantage of the new rules.
Trade bodies are also heaving for large foreign capital to come into the country, hoping it will make Indian retailers more efficient and cost-effective. FICCI President Saroj Kumar Poddar said on Wednesday that apart from pushing for the manufacture of branded goods in India, the government should up encourage retailing in the agri-sector. ‘‘The step should follow from the ‘farm-to-market’, covering the entire cold chain,’’ Poddar said.
