Government policies promoting ease of doing business, changing consumer behaviour due to digital influence, and revamped retail strategies have spurred foreign inflows into retail and wholesale trade, a report said. The government’s proactive approach has been appreciated by global retailers who were sitting on the fence to invest into India, but have now taken a serious look, the joint report by Deloitte and Retailers Association of India (RAI) on foreign direct investment (FDI), launched at the Retail CFO Summit Tuesday said.
As per the Reserve Bank of India (RBI), FDI in retail and wholesale trade nearly doubled to USD 4.4 billion in 2017-18, from USD 2.7 billion in 2016-17. The report expects the quantum of foreign investments flowing into the country to increase further “given the increasingly favourable macroeconomic environment in India and the government’s consistent focus on making the business environment more conducive”.
Quoting the UNCTAD’s World Investment Report 2017, the report said, 20 per cent of the global executives favoured India as the host destination for investments during 2017-19, ranking the nation third after the US and China. The digital revolution is a main contributor to a paradigm shift in consumer behavioural patterns, according to the report, resulting in revamping of strategies formulated by retailers and the complete supply chain.
Increasing number of new retailers are rampantly turning digital in nature and are operating with vastly different business models than their more entrenched counterparts, it added. “Growth is largely driven around convenience for the consumer, which has helped e-commerce and online sales,” Anil Talreja, partner, Deloitte India, told PTI.
Consumers especially of the age profile of under 32, are significantly driving progress and changing shopping habits, according to him. Listing out the challenges faced by the sector, Talreja said stumbling support sectors like infrastructure, and supply chain that are still not as advanced, and the rule of 30 per cent local sourcing, which requires companies to change their operating model, are the major roadblocks. It can be noted that the country’s retail sector is expected to grow to USD 1.1 trillion by 2020, registering a CAGR of 8.79 per cent between 2000 and 2020.