BANGALORE, March 27, 2014 /PRNewswire/ --
Foreign Supermarket Chains Jazz up Indian Neighborhoods
Foreign supermarket chains are making a beeline to India, sensing the immense growth opportunity of the country's $500-billion retail sector. After the Government of India allowed 51% FDI in multi-brand retail in September 2012, many global retailers are making their presence felt in the Indian market. They firmly believe in India's economic growth story, which has paved the way for a flourishing middle class with rising disposable income. Your publication on this coverage can be accessed at: http://wallstanalyst.com/sense-x/market-mantra/1756-tesco-to-go-desi
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Moreover, India is expected to witness steady economic growth over the next few years, far outpacing that of most major Asian economies. To this effect, many foreign retailers are entering into joint venture agreements with established local players to gain a firm foothold in the Indian retail space. In a race to emerge as the top players, some foreign retailers have agreements to supply merchandise and provide technical know-how and support their Indian partners. Read our coverage of the Indian retail sector by visiting the following link: http://wallstanalyst.com/Sense-X/Press-Conference/
FDI Norms Suffocate Foreign Players, Pave Way for Their Exit
While the Government of India's move to allow FDI in multi-brand retail brought cheers to foreign retailers, they were distraught with norms related to mandatory investment in back-end infrastructure, compulsory 30% local procurement norms, and restrictions on setting up stores only in cities with a population of more than 10 lakh. Seeing no way out, many major foreign players severed their joint ventures with Indian players.
Sensing the exodus of other major foreign retailers, the government quickly relaxed some norms, thereby allowing global retailers to source 30% of their products from SMEs only at the time of starting their business. Moreover, foreign chains were also given the green signal to set up stores in cities with a population of less than 10 lakh and invest lesser on back-end infrastructure as against the mandatory requirement of at least $100 million to set up shops in India. Please access this article by following the link below:
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Foreign Retail Chains Attract Ire from Unorganized Players
The government's move to allow 100% FDI in multi-brand retail has been strongly opposed by small traders and neighborhood grocery stores on the contention that they would be wiped out. Adding fuel to this dispute, major political parties have turned this tussle into an election battlefield by threatening to reverse this norm and protect the unorganized players if they are voted to power.
In a major development, two state governments withdrew the permission granted by their predecessors to foreign retailers for setting up supermarket chains. It is expected that many other states will follow the lead, which could keep away foreign investors from establishing their presence in the country. While the much-need FDI would augur well for the Indian economy, it remains to be seen what the government does to make the retail sector more investor-friendly for international bidders.
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