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Indian Retail Market

Opening more doors


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The recent wave of reforms by the Government to incentivize Foreign Direct Investment (FDI) in various sectors is bringing a new zeal to the investment climate in India. One of the most debated reforms is the policy for allowing 51 per cent FDI in multi-brand retail.

Deloitte, in the past, has expressed its views on FDI in multi-brand retail, while the policy was still at the proposal stage. In August 2010, it published a paper “Changing with the changing times” in which the Indian retail landscape was analyzed along with the potential impact of FDI in the retail industry. The paper also predicted that given the then prevalent political landscape, there was a high likelihood of allowing FDI in multi-brand retail.

Deloitte’s paper published in September 2011, “Embracing a new trajectory” analyzed various retail sub-segments in terms of their growth potential and penetration of organized retail. Food and Grocery retail and Apparel retail emerged as the most lucrative segments because of their large market size and high growth. The paper further cautioned that there will be no ‘one-shot’ or ‘big-bang’ kind of the approach towards introducing FDI in retail. Instead, foreign retailers should expect a policy with number of conditions laid down, at least initially.

As predicted, the Government has now notified 51 per cent FDI in multi-brand retail. The current paper shall closely examine the implications of the policy across retail segments, business stakeholders, as well as, foreign retailers.