After the Big Bang was utter confusion. Wiki says that “all ideas concerning the early universe are speculative”.
So is the case with the big bang Friday too. Speculation rules. The market is on a roller-coaster. There were even media reports of real estate players devising plans to welcome the giants.
The government is rushing through the reforms—it notified the measures on Thursday, a day before the Trinamool Congress announces the decision to pull out of the UPA.
Even as global retailers are raising concerns about the conditions set by the government, more ifs and buts have been placed in the retail FDI policy.
The government has decided not to allow online sales by firms with foreign ownership.
“Retail trading, in any form, by means of e-commerce, would not be permissible, for companies with FDI, engaged in the activity of multibrand retail trading,” according to the notification.
The step is likely to be a huge dampener as the global retail space is increasingly tilting towards e-commerce.
Of late, even Wal-Mart, which had changed the retail landscape through its brick and mortar business model, has started taking the online route in its bid to compete with the rivals like Amazon.
According to a Mint report, the decision is also likely to hit the plans of local e-commerce firms.
Most of these companies are in dire need of funds and are seeking investments from foreign venture capital funds.
The news comes even as global retailers are saying a “No, thanks” to India entry at the World Retail Congress in London.
“All my clients ask about India. But they don’t seem quite ready to put their money in it,” a report in The Economic Times quotes a London-based private equity and real estate consultant.
“We’re glad about the progress that has been made in India… But there are conditions,” says Lucy Neville Rolfe, board member of Tesco, Britain’s biggest retailer adding that he has to study the impact of the conditions.
Most of the executives quoted in the report have raised concerns about the state-wise division. It is probably the first time the Centre is taking a federalistic approach to bring in a major economic reform.
This is likely to put off many companies, as such a set-up is seen restricting their presence in the country.
Caution seems to be the buzzword for the majors for the time being.