Cabinet opens retail sector to foreign players

India will open the country's retail industry to foreign supermarkets, a much delayed reform expected to help unclog supply bottlenecks and ease inflation over time.

The government has allowed 51% foreign direct investment in the multi-brand retail sector. It also decided to raise the cap on foreign investment in single-brand retailing to 100% from 51%.
India until now allowed 51% foreign investment in single-brand retail and 100 percent in wholesale operations.
THOMAS VARGHESE, CEO, ADITYA BIRLA RETAIL, MUMBAI:
"For all domestic retailers in the country, this will make available capital apart from domain knowledge. For international retailers, it will open up a USD 1.6 trillion market growing at 8-9% so it's a big business opportunity for all of them as growth has slowed down for all of them.
"From the farmers' point of view this will help to improve realisations and expand yields through contract farming. We as a company haven't been in active discussions with any foreign investor. We will take things as they come."
JAY SHANKAR, CHIEF ECONOMIST, RELIGARE CAPITAL MARKETS, MUMBAI:
"I am not a firm believer in the job loss argument about FDI in retail. I am sure the government would have put in riders safeguarding the interests of local retailers.
"I think foreign chains can also bring in humongous logistical benefits and capital. There would be stupendous benefits from this move in terms of upgrading infrastructure, cold storage and it would eliminate layers of middlemen.
"It will give good prices to farmers and make it affordable for consumers, ease out supply chain bottlenecks and reduce inflation."
B MUTHURAMAN, PRESIDENT, CONFEDERATION OF INDIAN INDUSTRY:
"CII strongly supports the introduction of FDI in multi-brand retail recognizing that it would benefit the consumers, producers (farmers) and small and medium enterprises ("SMEs") and generate significant employment.
"This would open up enormous opportunities in India for expansion of organized retail and allow substantial investment in backend infrastructure like cold chains, warehousing, logistics and expansion of contract farming.
"India with a 8-9% growth in GDP is a consumer driven economy and modern retail has to step up to be able to meet up consumer aspiration not only in metro cities and towns but across the Indian sub-continent."
CHANDRAJIT BANERJEE, DIRECTOR GENERAL, CONFEDERATION OF INDIAN INDUSTRY:
"The biggest beneficiary of this announcement of FDI in retail would be the small farmers who will be able to improve their productivity and realization by selling directly to large organized players and therefore dis-intermediate the current value chain.
"The farmers will not only be able to increase their output but will also get better rewards in terms of realization by supplying directly to organized players and assured market for their products by tying up long-term contracts with them.
"This move is expected to substantially benefit consumers also by making available farm produce at much lower prices. This would also lead to growth, evolution and innovation in the un-organised retail sector."