FDI in retail beneficial for realty, FMCG sector: Experts

India Inc has lapped up the move. The government faces fire over its decision to liberalize the retail sector, but finally kicked off the second generation reforms yesterday with a green signal to 51% FDI in multi brand retail and 100% FDI in single brand retail.

While the industry has welcomed the government's decision on opening up the retail sector, the opposition has questioned the govt decision saying that it will hit the unorganised sector and will lead to predatory pricing. However, YC Deveshwar, chairman of ITC said that one of the greater positives that this move can achieve is the strengthening of supply chains which is of crucial importance.

Deveshwar feels it depends on how people use the investment in retailing. "Ultimately, it has to be linked to small and marginal farmer and eliminate wastage and strengthen supply chains," he pointed out. Once that happens, the cost will be eliminated, he added.

The realty sector too is cheered up for the move. They believe the move will be a big boost for the ailing sector. Rajiv Singh, vice chairman of DLF said that the move would give the Indian realty players a chance to compete with global peers.

According to Singh, this development would allow the retail sector to build malls, which are more international in size and standards, have a better choice of retailers within the malls and have better capitalise retailers that can provide a better choice and stock to consumers.

"This is a big opportunity for us to build world scale malls," he explained. The retail business, which has been lagging behind, will soon move to a status which will hopefully be in size and revenues equal to the office business, he further stated.

Also watch the accompanying video for Deveshwar and Singh's comments...