The organised retail trade in India is likely to witness a boom owing to a steady flow of Foreign Direct Investment in the country. “The increasing FDI and entry of multinational retailers in India is expected to increase the share of organised retail; thus, contributing towards consumption-led growth of the economy,” Deloitte India said in a report on Wednesday. Also, about 70% of kirana stores in big cities aspire to be tech-enabled and stores of the about 37% of kirana stores in tier II cities also want to on-board the technology rage. The FDI investment in retail has jumped almost 100% in FY19 $ 224 million in the previous fiscal to $ 443 million.
India is gearing up to become the third-largest consumer retail destination in the world and it is lucrative to those who are looking to make investments in retail. However, to keep the FDI flow steady, there is an urgent need for the government to address FDI policy and look into the trends of convergence of modern retail and traditional retail. “Global brands fetch capital investment, technology strength, and infrastructure benefits for local markets; thus, bringing in new sustainable retail models for an emerging economy such as India,” the report said.
Kirana stores in the country face challenges such as competition from e-commerce and other operational challenges such as lack of technology. However, FDI can help them with their issues and help in setting up modern payment tools and working capital issues.
India has improved dramatically on its ease of doing business ranking in the last five years. Speaking on the same, Anil Talreja, Partner, Deloitte India said: “The country has emerged to be the only one to have improved its ranking by more than 10 points consecutively for three years. This trend has helped enhance investor confidence and propelled greater inflow of FDI in India for retail.”
