Allowing 51 percent FDI in multi-brand retail can attract investments of up to $3 billion in India in the next two years, according to consultants.
Stating that the government's decision to go ahead with FDI in multi-brand retail sends positive signal to foreign retailers waiting to enter India, consultancy firms Tecnova, KPMG and Ernst & Young are unanimous that the latest policy reforms will stimulate the sector's growth.
"In the next maximum of two years, foreign investments of around USD 2-3 billion in the multi-brand segment can be expected after the decision," Tecnova India President Ajay Muttreja said. Tecnova specialises in cross-border market entry strategy and had helped the likes of global luxury house LVMH set up shop in India.
"These investments will come from mid and large sized companies, not only in the West but even from companies in the far East," he added. KPMG India Partner (Transaction Services) Mohit Bahl said even the single brand segment will benefit from the latest government move.
"In single brand retail, opportunities will be immediate and we may see some investments in the next 12 months," Bahl said, adding in multi brand retail, the benefits will be far reaching and of longer period.
Muttreja of Tecnova said in the single brand retail the investments may not be as big as those in multi-brand since many companies are already present in India. Ernst & Young Tax Partner Gaurav Karnik said relaxation in FDI norms is a good thing for the country. "Because of investments coming in and development of infrastructure, there will be more employment. Supply chain system will also improve and it will help farmers," he added.
Karnik further said there could be some impact on small kirana stores, but people will continue to prefer these shops. "Whether big retailers will come in immediately and how much investment they will bring in, we have to wait and watch, These big players have not gone very aggressively in other countries. Moreover, situation in other nations are also not so good," he said.
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Updated Date: Dec 20, 2014 12:03:41 IST