Last November 24, the Indian Government finally gave the green light to one of the most important economic reforms undertaken by New Delhi in the retail sector in India. The new law, which has been expected for a long time, will revolutionize the retail sector: from now on there will no longer be a ceiling on FDI and foreign companies will be able to hold the 100% of single-brand stores, and will be able to control up to 51% in multi-brand (which also concerns supermarkets). Until now, New Delhi did not allow foreign direct investment in multi-brand and allowed foreign companies up to 51% of shares in single-brand.
This is a historic decision that will radically change the Indian retail landscape: in the case of single-brand stores, foreign companies will no longer necessarily have to establish partnerships with local companies, while in multi-brand stores they will be able to open their own stores after having found a local partner. without resorting to cash & carry.
This reform will transform some sectors, including the luxury sector, supermarkets and agriculture and will also have important repercussions from a social and economic point of view:
– Indian consumers will have more choice
– Indian retailers will be able to count on the influx of money from abroad
– there will be the creation of new jobs and thanks to wider competition, a general lowering of prices
– there will be a modernization of the sector and of the logistic networks, and a better conservation of the products
– greater transparency will be ensured especially in the agricultural sector, dominated up to now by intermediaries
– local kirana shops will need to modernize to remain competitive
– there will be a drop in inflation, a real thorn in the side of the government
The Indian retail sector, whose turnover is around USD 450 billion a year, is therefore ready to explode definitively. However, it must be considered that not all states are in favor of this decision: the governments of the states of Tamil Nadu, Uttar Pradesh and West Bengal have already announced that they will oppose and will try to block the law. The situation is different for the States of Gujarat, Maharashtra, Rajasthan, Haryana, Andhra Pradesh, Punjab and Orissa which will support the reform.
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