Foreigner-frequented shops to benefit

Thanks to the new trade policy, retailers can now import capital goods such as freezers, air-conditioned trucks, fittings, furniture, IT systems at a concessional 5% duty, provided they earn foreign exchange through sales in their local outlets.

While retailers say the policy will benefit only a handful, they are happy that at least the step is in the right direction.

Speciality stores frequented by foreign travellers such as Fab India, Anokhi, Cottage Emporium, State Emporia, Khadi outlets and lifestyle stores will stand to gain by the policy announcement. “The policy will give a huge boost and enable us to import hardware for supply chain management,’’ says Fab India CEO, William Bissell. The policy will allow select retail outlets to upgrade their infrastructure and offer a superior experience to their consumers.

Of course, all forex transactions will have to be routed through international credit cards or traveller’s cheque mandated by RBI.

For now, there is little impact on retailers selling consumer durable and food and grocery as foreign nationals hardly make purchases in these categories in India. So Chennai-based durable seller Viveks and grocery stores of the South like Foodworld, Subhiksha and Nilgiris will have limited impact as they barely transact in foreign currency.

“But there are no downsides to the announcement’’, says retail consultant Arvind Singhal. The speciality stores and traditional clothing lines frequented by foreign travellers and NRIs will benefit, but majority retailers will not be impacted for now. Foreigners visiting India head straight to select stores. For instance, Fab India, which specialises in ethnic wear earns 15% of its revenue in foreign currency.

Of course, there are several foreign tourists who come to India on a shoestring budget, and generally buy artefacts off-the-pavement. They (pavement dwellers) in any case don’t require this concession as the question of importing capital goods does not arise.

According to Raghu Pillai, CEO of RPG Enterprises, the change in policy will enable food and grocery stores to import freezers and air-conditioned trucks. “It’s true we don’t earn the foreign exchange of speciality stores. But we do earn some and it will only grow in future.’’