Grocery, apparel to be favourites for MNC retailers: Deloitte
As per the policy, land cost and rentals that may be incurred for warehousing are not included in the definition of back-end infrastructure. The policy, however, does not specify whether investment in back-end infrastructure needs to be a fresh investment or if foreign companies can buy stakes in already established back-end infrastructure.
The new FDI policy also presents a unique set of implications for domestic retailers. On the one hand, it exposes domestic retailers to competition from foreign retailers, while on the other, it seeks to safeguard them with a slew of protective measures.
FDI in multi-brand retail is a state subject and as per the policy, e-commerce is not allowed as an alternate channel, as it can serve the customer beyond the physical location of the store.
“Restriction on foreign retailers from conducting multi-brand retail in towns with population less than one million can be construed as an enabling policy by domestic retailers, who should now focus their efforts to expand their retail footprint,” Gupta says.
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