'Foreign retailers may not enter India before 2014 elections'

New Delhi, Aug 4 (IANS) Foreign retailers like Walmart, Tesco and Carrefour are unlikely to enter the supermarket business in India before the 2014 general elections even though the government has partly addressed their concerns and relaxed the norms, industry experts say.

"Multi-brand retail business requires quite a large investment. I think retailers will prefer waiting to see more clarity," Anis Chakravarty, senior director, Deloitte in India, told IANS.

He said the government has tried to address some of the concerns raised by global retailers like Walmart, Tesco and Carrefour.

The government last week decided to dilute many contentious conditions in the multi-brand retail policy, including 30 percent sourcing from small firms, 50 percent investment in back-end infrastructure and access only to cities with over one million population.

Chakravarty said although Thursday's cabinet decision had brought some clarity in the policy, a lot of other ambiguities continued, and the retailers would like to get them addressed before taking the investment decisions.

The government has relaxed the policy related to the mandatory 50 percent investment in back-end infrastructure. As per the revised norms, retailers would be required to invest 50 percent in the back-end only of the investment that they bring for the first time. The minimum required investment is $100 million (nearly Rs.600 crore).

Chakravarty said confusions remained on whether the mandatory back-end investment has to be in "green field" or not.

"The changes to the policy remove some of the critical apprehensions that retailers had - it is a very positive step," Mohit Bahl, partner, KPMG in India, told IANS.

Political uncertainty is another major reason for delay in the global retail giants' entry plan into the Indian markets.

Several political parties, including the main opposition Bharatiya Janata Party (BJP) and left parties, have been opposing the policies. The BJP has said that it will reverse the government's decision on allowing the foreign retailers into Indian markets.

Talking to IANS, Praveen Khandelwal, secretary general, Confederation of All India Traders, accused the government of working under the pressure of global retailers like Walmart and Tesco.

Khandelwal said opposition parties including the BJP and left parties have assured the trade body that they would raise the matter in the monsoon session of parliament that begins Aug 5.

"Despite all these changes, I don't think any global retailers will come to India before the next general election," said Khandelwal, adding the BJP's opposition to the policy was scaring the retailers.

The government last year had opened the gates for the multi-brand retail sector to foreign investors by allowing up to 51 percent FDI. However, no foreign investment has taken place in the sector so far.

Explaining the relaxation in the policy, Commerce and Industry Minister Anand Sharma said last week that the government had taken the decision after having consultations with foreign as well as domestic retailers.

The government has relaxed the FDI policy for several sectors, including telecom and retail, to boost inflow of foreign money in a bid to revive the economy and control current account deficit.

Current account deficit, the difference between the country's total imports of goods, services and transfer and their exports, touched a record high 4.8 percent of GDP in the financial year ended March 31, 2013. The government targets to bring it down to 4.2 percent in the current financial year.

Sluggish exports and a sharp drop in FDI are the main reasons behind the high current account deficit.

The Foreign Direct Investment inflows to India declined to $22.42 billion in 2012-13 from $36.50 billion recorded in the previous year.

(Gyanendra Kumar Keshri can be reached at gyanendra.k@ians.in)

Matches

MORE TOP STORIES TODAY

Kallis, Narine star in Knight Riders’ crushing win

Kallis, Narine star in Knight Riders’ crushing win

An all-round display saw Knight Riders thump Mumbai Indians by 41 runs in the IPL-7 opener. More »

Pietersen to miss Delhi's first game

Pietersen to miss Delhi's first game

The former England batsman will have to lead the franchise as he is out of the match against Bangalore with a finger injury. More »

Srinivasan named in fixing report: SC

Srinivasan named in fixing report: SC

The court emphasised that the tainted administrator can no longer work for the BCCI. More »

'If you do the wrong thing it will be found out'

'If you do the wrong thing it will be found out'

'Everyone knows what is right and what is wrong and if you do the wrong thing it will be found out' More »

Why I'm not looking forward to the IPL

Why I'm not looking forward to the IPL

Welcome to another season of a league that many watch but few trust. More »

Mitchell Johnson may quit T20s for Test cricket

Mitchell Johnson may quit T20s for Test cricket

Australia's Mitchell Johnson may quit limited-overs cricket to prolong his test career with an eye on the 2015 Ashes series in England, the fast bowler… More »

There's a lot going on: Fleming

There's a lot going on: Fleming

He experienced anxious moments in the lead-up to the tournament as the courts decided on whether to suspend the franchise, he said, but stressed that the… More »

Latif couldn’t work with tainted players

Latif couldn’t work with tainted players

Former Pakistan cricket captain Rashid Latif said Tuesday he turned down the job of national chief selector because he could not work with ex-players tainted… More »

We are not over-confident: Bailey

We are not over-confident: Bailey

Indian Premier League — George Bailey-led Kings XI Punjab will face Chennai Super Kings on Friday. More »

Taxing issue — BCCI hits roadblock

Taxing issue — BCCI hits roadblock

MoU between BCCI & its units to avoid double taxation delayed after a few decline to share details. More »

Big runs expected, with bat and ball

Big runs expected, with bat and ball

Royal Challengers Bangalore: Their main concern, once again, is the fast bowling More »

Black Caps pick rookie duo for West Indies

Black Caps pick rookie duo for West Indies

New Zealand selectors included two new caps in a 15-man Test squad named Tuesday to tour the West Indies, with injury-hit spinner Dan Vettori's future… More »

The stage is set for IPL-7 to start

The stage is set for IPL-7 to start

The Preview — Defending champions Mumbai Indians take on Kolkata Knight Riders More »

Srinivasan appeals to court to allow BCCI comeback

Srinivasan appeals to court to allow BCCI comeback

He was aggrieved by the allegations against him during the hearing. More »

Klinger on his exit from South Australia

Klinger on his exit from South Australia

Michael Klinger has revealed he felt compelled to leave South Australia after being told he would be only a fringe part of the Redbacks' plans for next season, and disputed the suggestion that he left… More »

India: cricket's Brazil

India: cricket's Brazil

They are tough to beat with a big talent base exposed to good facilities. (CYCSPL) More »

Delhi Daredevils say no to gifts

Delhi Daredevils say no to gifts

Franchises are doing their bit to refurbish the image of the tainted league. More »

India-Pakistan Test series likely in 2015

India-Pakistan Test series likely in 2015

The revival of Indo-Pak Test ties could take place in UAE. More »

Kohli hopes to end RCB trophy drought

Kohli hopes to end RCB trophy drought

'This time around we will hope to go few more steps ahead and actually get that trophy' More »

Gavaskar can help IPL regain glory

Gavaskar can help IPL regain glory

Apart from the foreign players a lot of behind-the-scene activity has taken place in selecting the Indian domestic players. More »

Tendulkar, Ganguly to promote soccer

Tendulkar, Ganguly to promote soccer

Leading Spanish club Atletico Madrid and former cricketers Sachin Tendulkar and Sourav Ganguly are among the owners of eight franchises of a new Indian… More »

This isn’t my first trip to India: Neesham

This isn’t my first trip to India: Neesham

Kiwi all-rounder wants to utilise the India leg to explore the country’s tourist attractions. More »

Ishant wanted to quit ODIs

Ishant wanted to quit ODIs

Says his mother made him change his mind. More »