New Delhi: The Union Cabinet’s approval of 100 per cent foreign direct investment (FDI) in single brand retail, on Wednesday, drew mixed reactions, with industry observers lauding the move and the trader lobby opposing it, terming the government’s decision “a serious matter for small businesses”. “This is another positive step from the government towards ease of doing business in India. By allowing 100 per cent FDI in single brand retail under the automatic route, foreign entrants will find it easier to set up operations in the country,” said Dhanraj Bhagat, Partner, Grant Thornton India LLP.
However, the Confederation of All India Traders (CAIT) strongly condemned the government’s decision stating that the step will affect smaller businesses by paving way for the foreign brands to dominate the country’s retail trade. “The CAIT strongly opposes the move to allow 100 per cent FDI in single brand retail through automatic route as it will facilitate easy entry of multinational corporations in retail trade of India and will also violate poll promise of BJP,” the traders’ body said in a statement. “It’s a serious matter for small businesses. It is a pity that instead of formulating policies for the welfare, upgradation and modernisation of existing retail trade, the government is more interested in paving way for the MNCs to control and dominate the retail trade of India,” it added. The CAIT also pointed out that such a step will result in a large number of “people being left jobless”. According to Aashish Kasad, India region tax leader, consumer products and retail, at EY India, the step will give the Indian consumers access to several foreign brands. “Permitting 100 per cent FDI in single brand retail under the automatic route is another progressive step by the Government of India towards attracting foreign investment and ease of doing business in India. This should also generate employment and give the Indian consumers access to several international brands,” said Kasad.
Rajat Wahi, Partner, Deloitte India, said: “Global brands across different categories, from apparel to electronics to accessories will be aided through this, providing further options to Indian consumers and improving India’s ranking in ease of doing business.” The Centre’s decision will also boost the demand for retail space, according to consultants. Pankaj Renjhen, MD, Retail, JLL India, said the decisionwill provide a quantum growth to the retail sector. “The timing for this announcement is significant as the retail sector is poised to receive significant real estate supply in the near future. After a prolonged period of slowdown in the retail sector over the last few years, we saw strong comeback with developers and investors betting high on the sector,” he added.