The list of international retail chains invited for an open house with Indian Commerce and Industry Minister Anand Sharma this Thursday seems to suggest there are at least four more US groups, apart from Walmart, that have shown interest in the Indian market. Also, from Germany, there are two others, besides the already present Metro Cash & Carry, which might have made enquiries on the Indian retail business.
Non-metro major emerging cities of Jaipur, Kochi, Ludhiana, Indore, Nagpur and Udaipur are being perceived as the upcoming cities that retailers are considering with growing seriousness.
A government panel on Tuesday proposed raising foreign investment limits in sectors like defence, multi-brand retail and telecommunications, to spur investment in India and tide over the Current Account Deficit woes.
The committee, which was set up by Finance Minister P Chidambaram to review the sectoral caps, has suggested that the Foreign Direct Investment (FDI) ceiling in the defence sector be raised to 49 percent under the government approval route from 26 percent at present.
A slowdown in the economy and poor consumer sentiment have hit India's leading organised retail players, which saw sales growth fall by almost a third last financial year. The average sales growth of the top three listed retailers – Future Retail, Shoppers Stop and Trent – came down to 11 percent in 2012-13 from 29 percent the year before, data culled by BS Research Bureau showed.
India's retail inflation stood at a higher-than-expected 9.31 percent in May, dashing hopes of any aggressive policy rate cut by the Reserve Bank of India on 17 June.
The consumer price index (CPI)-based inflation for May was, however, lower than retail inflation of 9.39 percent in April.
For May, retail inflation in both rural and urban areas saw a decline on a sequential basis.
Global retailers like Walmart and Tesco can set up warehouses, cold storages and source products from SMEs in Indian states which have not permitted FDI in the multi-brand retail sector, a senior official said.
"Foreign players can set up warehouses and also source products from small and medium enterprises from those states which are against FDI in multi-brand retail. No state will stop any foreign player to procure goods or do business with SMEs," a top official in the Department of Industrial Policy and Promotion (DIPP) told PTI.
Though economy is yet to look up, promotional events, wedding season have propped up the same store sales growth of Indian retailers such as Future Retail (erstwhile Pantaloon Retail), Shoppers Stop and others in the March quarter.
Same store sales growth, a key metric in retail industry, refers to sales growth coming from stores which are in the business for a year or more.
India's retail inflation fell for the second month in a row to 9.39 percent in April on the back of easing vegetable and edible oil prices.
The consumer price index (CPI)-based inflation for March stood at 10.39 percent in March and 10.91 percent in February.
Vegetable basket prices eased to 5.45 percent in April from 12.16 percent in March.
US retail giant Walmart and French multinational retailer Carrefour have written to the Indian Government seeking clarity on certain rules guiding investments in multi-brand retail, including those related to compulsory sourcing of inputs from the small and medium enterprises (SMEs) and investing in back-end infrastructure.
The mandatory USD50-million back-end investment to be made by foreign multi-brand retail chains, such as Walmart, Carrefour and Tesco, would not be restricted to greenfield (new) facilities alone in India.