The Hindu Business Line : `FDI in retail sector will boost investments in technology'

(From left): Capt G.R. Gopinath, Managing Director, Air Deccan, with Mr Raman Pandya, President-Retail, Essar Oil Ltd, and Mr Devangshu Dutta, CEO, 3i, at the India Retail Summit in Mumbai on Saturday. — Paul Noronha

Mumbai , Nov. 27

IF and when the Government allows foreign direct investment (FDI) in the retail sector, it should be granted in stages, with 26 per cent allowed in the initial stage, followed by 49 per cent in the establishment phase, and 100 per cent when the industry achieves maturity, according to Mr Rajiv Sabharwal, Chief Operating Officer, ICICI Home Finance Co Ltd.

Making a presentation at the India Retail Summit here, Mr Sabharwal sought industry status for the retail sector, single window clearance for retail chains, VAT reforms in the pricing mechanism, besides improvements in land availability, development of supply chain infrastructure and flexible labour laws.

Making a case for FDI in retail, Mr Sabharwal said such fund inflows would not only boost the sector, but also have a positive impact on the economy, besides delivering several benefits to the Government.

As a result of FDI flows, one can expect to see stepped-up investments in technology, given the need to improve the country's cold chain network as well as its food processing technology. There was also a need to improve production cycles and distribution network.

Further, FDI could see an improvement in the lifestyle of the middle-income group, as the entry of international players would lift the wage structure in the industry, besides introducing a wide variety of products to the market, said Mr Sabharwal.

The Singapore and Dubai shopping festivals were examples of the possibilities for improving tourism thanks to the retail industry.

The long-term impact of such a move will be the development of more efficient small and medium enterprises.

Eventually, exports will also stand to gain with investments flowing into the supply chain structure.

Such flows can directly touch the Government by spurring GDP growth, which will follow an expected growth in consumer spending. As the country develops into a large sourcing base, it can also become an export hub.

The development of the industry will also improve tax realisations and cut down evasion.

The huge employment capacity of the sector will increase the tax-paying population in the country, he said.

Overall, such investments will lead to improved competitiveness and efficiencies, besides developing the market and boosting exports, Mr Sabharwal said.

More Stories on : Events | Foreign Direct Investment | Technology

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
`FDI in retail sector will boost investments in technology'

Will shopping malls deliver?

Food for thought in retailing