FDI in retail: Multi-brand retail can attract $3 bn FDI in 5 years, says Crisil
Crisil Research said permitting foreign direct investment in multi-brand retail will attract foreign investments of about $ 3 billion over the next five years.
By PTI | Updated:
NEW DELHI: Crisil Research today said permitting foreign direct investment in multi-brand retail will attract foreign investments of about $ 3 billion over the next five years.
"Foreign direct investment (FDI) in multi-brand retail will stimulate investment in Indian retail. Crisil estimates FDI inflows of $ 2.5-3 billion over the next five years," it said in a report.
It said the funding would be gradual and foreign retailers are unlikely to gain a dominant share over the next five years.
Last week, the Cabinet cleared 51 per cent FDI in multi-brand retail and 100 per cent in single-brand retail.
The Cabinet decision is likely to catalyse joint ventures between Indian and foreign organised retailers, Crisil said.
The FDI proposal offers good prospects for large established Indian retailers.
"However, for smaller and regional retailers, scale of operations and control over costs will determine their ability to weather pressures of aggressive expansions by large retailers," Crisil Ratings Head Anuj Sethi said.
In the past five years, total FDI into India in all sectors was $ 160 billion.
According to Crisil, the food and grocery (F&G) vertical would attract a larger share of the likely FDI inflows. F&G accounts for two-thirds of Indian retail sales, but presently has organised retail sales of only around 2 per cent, the lowest among retail verticals.
"To improve profitability in the F&G segment, retailers need to control their supply chain costs and build scale," Crisil Research Head Ajay D'Souza said.
"Foreign direct investment (FDI) in multi-brand retail will stimulate investment in Indian retail. Crisil estimates FDI inflows of $ 2.5-3 billion over the next five years," it said in a report.
It said the funding would be gradual and foreign retailers are unlikely to gain a dominant share over the next five years.
Last week, the Cabinet cleared 51 per cent FDI in multi-brand retail and 100 per cent in single-brand retail.
The Cabinet decision is likely to catalyse joint ventures between Indian and foreign organised retailers, Crisil said.
The FDI proposal offers good prospects for large established Indian retailers.
ADVERTISEMENT
"However, for smaller and regional retailers, scale of operations and control over costs will determine their ability to weather pressures of aggressive expansions by large retailers," Crisil Ratings Head Anuj Sethi said.
In the past five years, total FDI into India in all sectors was $ 160 billion.
According to Crisil, the food and grocery (F&G) vertical would attract a larger share of the likely FDI inflows. F&G accounts for two-thirds of Indian retail sales, but presently has organised retail sales of only around 2 per cent, the lowest among retail verticals.
"To improve profitability in the F&G segment, retailers need to control their supply chain costs and build scale," Crisil Research Head Ajay D'Souza said.
Start a SIP with as low as ₹500 with ET Money App!
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
Related Articles
Corporate India’s overseas FDI commitments halve in MayADVERTISEMENT
