Will BJP soften its stand on multi-brand retail?


April 7, 2014

Bindu D. Menon, The Hindu Businessline
Mumbai, April 7, 2014

When it comes to retail trade, there seems to be room for negotiation in BJP’s 2014 manifesto.

From being “open” to retail trade in 2004’s vision document to a total blanket ban to FDI in retail in 2009; the party’s latest poll manifesto states that it is “open to FDI in job creating sectors but against FDI in multi-brand retail trade”.

Trade watchers point out that the manifesto should be seen as a political document rather than an economic one and with the party being largely seen as pro-business, it is likely to bring changes in the current FDI policy particularly in retail once voted to power.

Barring multi-brand retail sector, FDI will be allowed in sectors that allow job creation, says the manifesto. The party also said it would make the functioning of the Foreign Investment Promotion Board (FIPB) “more efficient and investor-friendly”.

However, industry sources said the party may soften its stance and allow FDI in retail but with riders. They pointed that an indication of this softening can be seen in a speech by BJP’s Prime Ministerial candidate Narendra Modi given in February where he made strong pitch for use of technology in retail sector.

Arvind Singhal, Chairman, Technopak, a retail consulting firm, said, “The manifesto is a document of political convenience. Almost all parties want to woo voters and the BJP is no exception. Having said that, once the party comes to power it is unlikely to remain silent on the subject. BJP Government in its past avatar has been highly liberal with business. We see room for negotiation in retail as well”.

A Deloitte report notes that emerging markets enjoy strong demand and retailers based in India, Brazil and Russia continued to see strong consumer demand.

“Economically, India appears to be on a low growth trajectory largely due to the astronomical growth turning out to be unsustainable, leading to bottlenecks that created inflation. However, as an emerging market, India promises a positive long-term outlook for global as well as Indian retailers. Many reforms pertaining to the retail sector of the country are likely to take a speedy implementation route post the upcoming elections,” Gaurav Gupta, Senior Director, Deloitte Touche Tohmatsu India, had said in a report.

Our Mumbai Bureau adds: Devangshu Dutta, retail consultant, said that the “explicit” declaration is not only a major disappointment for international multi-brand retailers that are looking to invest in India, but also for large Indian multi-brand businesses that might be looking at attracting equity.

However, experts are also of the opinion that this single agenda would not impact the party’s chances, because there are several other issues that make for perhaps bigger and more immediate concerns for the electorate in this election.

(Sourced from The Hindu Businessline.)