How FDI in retail helps the fashion sector
Jan 20 2014
Recently, when Delhi chief minister Arvind Kejriwal disallowed foreign direct investment (FDI) in multibrand retail in the national capital, there was a huge uproar in the India Inc, which called it a regressive step as far as economy goes. There are even fears that other states might follow this trend.
As retail is a huge domain in itself, I will just talk about the impact of FDI in apparel, since that is what I can analyse. First, I would like to mention that the decision of FDI in Indian apparel retail won’t make much of a difference as many global brands have already entered India, either via a joint venture or a licence agreement with an Indian franchise. Also, despite the ease of norms, these brands have not changed their policies. Nevertheless, there might have been some operational changes. Still, there are both pros and cons of FDI in the apparel sector and it would affect people in different ways. Those export houses or small and medium enterprises (SME) that are already supplying to these brands would definitely gain in the long run as the demand for such labels are bound to increase.
We are already seeing a lot of sourcing from these brands shifting towards countries like Bangladesh and Vietnam, so this might pull them back and add more sourcing from India. It will also create a lot of jobs for the fashion and retail students and would encourage a chain of related avenues from education, training and recruitment. It would also make retail much more organised and the tax system more structured.
Coming to the downside, the biggest losers would be the entrepreneurs who have small shops and sell non-branded items, as they would not be able to match the variety and pricing set by these foreign brands. They would also make the real estate price escalate due to the huge demand, and thus make it very hard for any new entrepreneur or designer to start their own store.
Honestly, if we speak about metros, then there are not many good spaces available for new start-ups. And those which are available are at very high rentals. I have mentioned this in lot of my previous columns that we need to encourage new creative minds that are continuously getting demoralised due to lack of options. Some of the recent placements from premier fashion colleges have all been from brands or big export houses where their profile demands limited display of creativity.
I feel our country needs to be liberal in its economic policies, but at the same time, some provision has to be made to ensure that our pool of creative talent is nurtured to its core.
(The writer is a Delhi-based fashion designer)