The document discusses India allowing foreign direct investment in multi-brand retail. It notes this decision was upheld in parliament, sending a strong signal to foreign investors. It outlines the rules for foreign investment in retail, including a 50% limit on multi-brand retail and requirements to invest in backend infrastructure. The document also discusses the expected positive impacts on jobs, small businesses, and the overall growth of the Indian retail sector.

1. By
Ravi Thomas

2.  Motion seeking withdrawal of the government's
decision to allow foreign direct investment in multi-
brand retail defeated
 Strong signal to foreign investors
 Enable the government to take up further economic
reforms
 A milestone in the economic reforms saga
 Growing foreign investor confidence

3.  51% FDI in multi-brand retail sector
 100% FDI in single-brand retail sector
 Very high current account deficit-Foreign Investment
critical
 Retail stores to be set up in states that have agreed to
FDI or will agree to rules of FDI
 At least 50 per cent of total FDI brought in shall be
invested in ‘back-end infrastructure’ within three years
of the induction of FDI
 Where ‘back-end infrastructure’ will include capital
expenditure on all activities, excluding front-end units

4.  Retail sales outlets to be set up in cities with a population of
more than 10,000,000 people as per 2011 Census
 May also cover an area of 10 km around the municipal/urban
agglomeration limits of such cities
 In states or Union territories not having cities with
population of more than 10,000,000 as per 2011 Census,
retail sales outlets may be set up in the cities of their choice,
preferably the largest city and may also cover an area of 10
km around the municipal/urban agglomeration limits of such
cities
 India's first retail sector focused business school is coming up
at Hyderabad from Global Retail Education and Training
(GREAT), India, in partnership with the Australian Retail
College (ARC).

5.  Indian retail sector are likely to create 10 million jobs over
the next 10 years according to Indian Staffing Federation
(ISF)
 Measures will open doors for the less skilled and less
educated people
 Logistics and supply chain companies are also expected to
make rapid progress
 Close integration within the organized retail chains will
support the small producers in gaining access to the latest
processes, systems and technologies available in the market

6.  According to A T Kearney's Global Retail Development Index
(GRDI) 2012:India has emerged as the fifth most favorable
destination for international retailers
 The Indian retail industry is pegged at US$ 500 billion
 India's retail sector is expected to grow to about US$ 900
billion by 2014, according to a report by global consultancy
and research firm, PricewaterhouseCoopers (PwC)
 Retail market is expected to reach US$ 1.3 trillion by 2020
 Retail growth of 15-20 per cent expected over the next five
years

7.  Cash and carry represents an opportunity worth around
US$149.19 billion of the US$497.29 billion annual retail
business in India
 India's e-retail industry is likely to touch US$1.26 billion by
2015, up from US$361.66 million currently, as per an industry
body report
 Consumer markets in emerging market economies like India
are growing rapidly owing to robust economic growth

8.  Rural retail chains growing rapidly
 India's franchise market is growing at a healthy pace with tier II
and tier III cities gradually getting attracted to the network of
retailers and franchisers
 India has witnessed impressive growth of around 30-35 per cent
year-after-year over the last 4-5 years with an estimated
turnover of US$4 billion according to MrGauravMarya,
President, Franchise India
 Companies focusing on rural markets then going global
 IKEA plans to set up 25 single-brand retail stores in India
through its 100 per cent subsidiary

9.  Italy's Damiani to set up a 51:49 joint venture
 FMCG Company Procter & Gamble (P&G) is planning to invest more than
Rs 1,500 crore (US$279.4 million) over a period of time in its unlisted
Indian arm P&G Home Products to ramp up operations in the country
 US-based accessories manufacturer Fossil Inc has proposed to invest Rs
20 crore (about $4.5 million) in India in a fully owned single brand retail
venture
 Pavers England to invest $20 million in its Indian single brand retail
strategy
 Walmart, Carrefour and Tesco are interested in entering the Indian
market in front-end operations
 French retail giant Auchan Group to open franchise stores in India
 Brooks Brothers to invest Rs 6.22 crore ( Rs1=0.02 UD$)
 IKEA proposes to bring in Rs 10,500 crore of foreign direct investment
(FDI), the largest in the category so far ( Rs1=0.02 UD$)

10.  Weak supply chain in India: Lot of losses of fruits and meats
and other products
 Specialized supply line services for optimizing and reducing
loss
 Sound infrastructure
 Good point of sale and inventory management and other
software
 Medium and small scale manufacturers to keep shelves filled
 Trained work force
 Real estate and floor space

11.  E-mail: ravi@ravipthomas.com