After a series of debates, discussions, opposition, rollback and voting in both houses of Parliament, the government can finally go ahead with allowing FDI in multi-brand retail. Both houses of Parliament[Lok Sabha & Rajya Sabha] gave the go ahead last week.
This was one of the biggest reforms that the sector as a whole awaited and is certainly a positive step towards industrializing the sector. We will now witness talks between foreign retailers and Indian companies taking shape faster. FDI is allowed with some conditions as discussed in this Retail Forum.
While this move is surely a big positive for the Indian retail sector, the actual benefits of the same taking shape only after five to seven years. In our opinion, it will take 18 to 24 months for companies to open their first few shops in the country. Once the benefits of these stores are visible (two to three years after the first store opening), expect at least some of the states that are currently opposing FDI in multi-brand retail to change their view and welcome foreign investment. This will be the second leg of the post FDI retail boom in the country.
Future Group’s Pantaloon Retail will be the biggest beneficiaries of opening up of FDI in multi-brand retail. The company is also restructuring its business verticals so as to align similar businesses under one umbrella. This will ease the investment as funds can be channelised according to the needs of the segment.