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With Wal-Mart Stores Inc. (Wal-Mart), the
world's largest retailer, inking a deal with the Bharti
Group for its foray into the Indian market, analysts and
industry experts have high expectations for the future
growth in the sector. But some note that the lack clarity in
the Government's policy has put back the entry plans of some
of the major international players. While the government
allows foreign players to run their retail business through
franchisee agreements and licensing, FDI (upto 51%) is
allowed only in single-brand retailing.
Many of the large foreign players have adopted a
wait-and-watch policy as they think that it is too early to
enter the market until a substantial percentage of FDI is
allowed into multi-branded retail. |
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For example, retail giants like Tesco plc (Tesco), the
second largest retailer in Europe, and Carrefour SA, the French retailing
giant, have gone slow on their plans to enter India.1
Some observers believe that the government's objective in delaying the
opening up of the sector is to let domestic players grow strong enough for
them to withstand the onslaught of the big foreign players. The cite that
the same sort of state protectionism was given to local retail players in
some countries like South Korea and China before the economy was opened to
foreign players.
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Industry analysts opine that the main challenges
to the growth of the retail sector come from the very problems that
plague the Indian industry such as inadequate infrastructure, poor
logistics and rigid labor laws. As the retailing business depends
heavily on sound infrastructure and good logistics support, the real
challenge would be to improve the infrastructure in the country.
Another challenge will be to ease the rigid labor laws as the sector
is expected to recruit large number of people as it grows. In
addition to the above challenges, it is the pro-leftist stand of the
government's policy in the Retail sector which has been a main cause
for worry for the industry. While the CPI (M) has staunchly opposed
the entry of foreign players into the Indian retail sector, some of
the recent statements by its party representatives such as giving
licenses to domestic players that have caused concern even among the
domestic players.2 |
India Remains The Most Favored Retail Destination Contd... >>
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