Retail FDI not an ‘open-and-shut’ case

Foreign direct investment (FDI) in retail is not an open-and-shut case, according to J Suresh, Chairman, Retail Committee Confederation of Indian Industry, and Managing Director of Arvind Brands. Speaking to Business Line , Suresh outlines that the focus should be on putting economic growth back on track, as it would create demand. Excerpts:

Is the retail sector concerned, especially with the Bhartiya Janata Party (BJP) government strongly opposed to FDI (foreign direct investment) in retail?

Retail is not an open-and-shut case. We strongly believe the Government will look at it at a later date, once they see accrued benefits, such as employment and contribution to GDP.

We are not anticipating a major reform in the coming Budget, considering the BJP’s stance against opening up of the retail trade to FDI. As an industry body, we are optimistic about the sector. Organised retail has been growing at 15 per cent and we hope it will grow to 30-35 per cent by 2025.

So, the retail sector seems to have made peace with the BJP’s anti-FDI stance…?

The current government is clear on its stance regarding FDI in retail. Moreover, we too have maintained that opening up of the sector would not be a game-changer.

Though the previous Government opened up the sector, there has been no dramatic spurt in investment in retail. Hence, the FDI policy in its current avatar needs to undergo reforms to attract investment. Clauses regarding investments and sourcing have been a deterrent.

There is a feeling that India has missed the retail bus. Several international retailers are also threatening to pull out of India. Is that what the industry also feels?

Quite the contrary. We feel that the retail boom is still waiting to happen, as per capita income grows. We hope the second wave of growth will come by 2018, as economic growth happens. Then, we will be second only to China in terms of retail growth.

Incidentally, international retailers going cautious on their investments in India has more to do with their internal policies.

What, in your opinion, could possibly help the retail sector?

The Government is working to put economic growth on track. The mood is positive, and once there is semblance of growth, funds will also pour into the sector.

As an industry, we are seeking more foreign institutional investor (FII) participation in retail, as it will ease the funds crunch, especially for unlisted retailers. Additionally, we are expecting some clear indication on the rollout of GST (Goods and Service Tax). This will help in uniform taxation across States and ease the service tax pressure.

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