Retail sector renews plea for industry status
Feb 18 2010 , New Delhi
"Industry status has be- en a long-standing de- mand of the retail sector.
Besides, we also want a re- laxation in the foreign di- rect investment norms," Retailers Association of India CEO Kumar Ra- jagopalan said. .
Sharing similar views, Koutons Retail India chair- man D P S Kohli said, "In- dustry status has been a re- curring demand of the re- tail sector for many years because only then will re- tailers be able to fully enjoy the benefits of organised fi- nancing, insurance and fis- cal incentives."
According to industry figures, only around five per cent of the estimated $ 450 billion Indian retail sector is organised. Calling for easing of FDI norms, Rajagopalan said, "No industry in India has grown without foreign di- rect investment participa- tion. For retail to emerge as a big player, more FDI should be allowed."
Besides, he said if FDI norms are not relaxed, the government must give a cl- arification on FII and for- eign PE funding as there is a lot of ambiguity.
Koutons' Kohli said clar- ity on the issue would help Indian retailers raise funds from abroad as the global liquidity condition is show- ing improvement.
At present, the govern- ment allows 51 per cent FDI in single brand retail- ing and prohibits any for- eign investments in the multi-brand segment.
Vishal Retail's CEO Ram Chandra Agarwal said, "Easing of FDI norms will bring much needed fund- ing which is very important for the sector at this time.
Besides, it will also bring along more competition."
He said the government should rationalise the tax structure and eliminate multiple layers of taxation as that would help make the sector more organised.
Franchise India chair- man Gaurav Marya said the government should make a special budgetary allocation to franchising businesses from the fi- nance allocated to the fi- nancial institutions.
"There are 35 million small and medium business units in India of which the retail sector constitutes 18 million units. Credit is a major hurdle in growth of franchising," he said.
Supporting the stand of the retail sector players, global consultancy firm Ernst & Young (E&Y) said that funding is the biggest issue coming in the way of successful growth of the re- tail industry.
"Allow more FDI and grant it industry status.
Both the steps will help re- tail to access capital and become competitive and will ultimately help con- sumers by giving them more choices," E&Y part- ner and industry leader (retail and consumer product practice Pinaki Ranjan Mishra said.