There are ~45 cities in India with population higher than 1 mn [10 Lakh]. However, with a few state governments already deciding against FDI in multi-brand retail, the immediate addressable target market for such FDI would be restricted to 16 cities. Interestingly, 10 of these cities are in Maharashtra. We also highlight the existing operations of many big format retail companies are wide spread including in cities with state governments opposing the move. This shall pose a technical challenge to operationalize the FDI in these companies.
Existing Indian players like Pantaloon Retail, Trent, Shoppers Stop, CESC and Reliance Retail stand to benefit as they shall be able to attract much needed funds in the capital intensive big box retail formats. However, these companies shall face technical issues [50% investment in backend, 30% outsourcing to MSME etc] in operationlizing FDI. Also, foreign players present in India like Tesco (backend arrangement with Star Bazaar of Trent) and Walmart (wholesale format and backend arrangement with Bharti’s retail stores) can gain a head-start by capitalizing their presence in the country.
The List of Cities in India Where FDI In Muti-Brand Stores is Possible is as follows,