Proposal Suggests FDI in Multi-Brand Retail by 2015

Aug. 19 – One of India’s top ranking business schools said in a report that the government should give local businesses five years to develop before opening multi-brand retail to foreign direct investment.

The report made by Birla Institute of Management Technology (BIMTECH) said “…a breathing space of five years till 2015 should be given to the unorganized retail sector so as to enable this crucial sector to re-orient its strategy and be competent to face competition from foreign investment.”

The debate for developing the multi-brand retail market by opening the market to foreign direct investment has been ongoing and intensified when the Department of Industrial Policy and Promotion released a discussion paper on the matter.

BIMTECH proposes that FDI in front-end retail should be allowed after 2015, and foreign investments could be allowed immediately in back-end retail to improve the supply chain. “If the government allows FDI in back-end retail right now that will strengthen the supply chain by the time multi-brand retail becomes open, say after five years,” said BIMTECH Director H. Chaturvedi.

Foreign investment in back-end retail will serve to make supply chains more efficient; cutting down on food waste. The BIMTECH report also went on to suggest that the government should have a fund for educating retailers in the unorganized sector in customer service and product presentation.