Naushad Forbes, Director, Forbes Marshal said that it is important for companies to focus on domestic investment before looking foreign investment.
Forbes, in an interview with CNBC-TV18’s Sheeren Bhan said companies have started investing in their existing businesses to improve efficiency, which is the first step in investment cycle. Noel Tata, MD, Tata International added that only certain pockets are growing as far as retail and consumption segments are concerned.
“We would like if it is completely opened up, but the government has to balance itself,” Tata said while discussing the retail sector, adding that government is considering its options in multi brand retail segment.
Forbes said policy and opportunity both are important for inflow of investments into the country.
Below is the transcript of Naushad Marshal and Noel Tata with CNBC-TV18.
Q. How can we revive the domestic investment?
Forbes: Before we expect foreign investment to take place, we should expect Indian investment to take place and we are starting to see the first signs of that. In our own business, we are starting to see companies that have existing plants, starting to invest in improving them and trying to become more efficient. That is the first step in the cycle turning and in a broader investment activity taking place in new projects. That we do not see as happening yet. However, I think it is a matter of time before the cycle turns and we start seeing new projects being initiated as well.
Q: As far as the consumption story is concerned, what is your sense about the strength of consumption story today and what would that translate into as far as your own retail plans are concerned?
Tata: At the moment, it is quite a patchy consumption story. Certain sectors are showing growth, others are still little soft and I think the jury is still out as to how strong the consumption story is going to be. Some retailers are doing better than the others and some sectors of retail are still a bit soft.
Q: In terms of expansion now and you are here in the US, Walmart was forced to give up its plans as far as retail in India is concerned. They are still there, but not the way they would like to. Government hasn’t denotified the retail policy that kind of muddled on it saying that the policy stands, but we don’t welcome foreign direct investment (FDI) into multi-brand retail. How do you read that and do you believe that it should be a clearer path that the government should articulate?
Tata: This retail entry is possible in many sectors of retail. I think it is perhaps wrong to just look at retail as one big sector. There are many areas in which foreign investment can come in either as 100 percent or as 51 percent and the government is weighing its options as far as multi-brand retail is concerned, which is just one part of the total retail story. We would like if it is completely opened up, but the government has to balance itself.
Forbes: And it has been very consistent on including on multi-brand retail. It has broadly continued with the policy of the past.
Q: The policy stands but the government has said that we don’t welcome foreign direct investments so why would a foreign investor put significant capital into India into multi-brand retail sector where the government telling you that the policy stands, but we don’t want your money.
Forbes: I think investment flows to opportunity and whether one says that investment is welcome or isn’t at the end of the day determine whether or not the flows take place. We don’t necessarily see an immediate flow of investment following that welcome mat. I think one needs policy to enable investment to take place, but at the end of the day, it is opportunity that is going to determine the quantum of investment that takes place.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
