NEW DELHI, Nov 24: The ongoing retail boom is expected to translate into eight million new jobs over five to six years. This is in addition to the 21 million jobs already sustained by retailers, including ‘mom & pop’ stores.
The situation could turn even better once retail gets industry status and big-time investments flow in — either from multinational chains or home-grown corporates.
According a recent survey by PriceWaterhouseCoopers, the Indian retail sector is a $210-billion pie which is witnessing a healthy pace of five per cent per annum. Of this, organized retail now accounts for only three per cent but is expected to expand its share to 10 per cent by 2010.
In other words, organized retail would triple its share of the Indian market in the next five years and this explains why corporates are rushing into this segment.
“It is not correct to say growth in organized retail would drive neighbourhood shops out of business. Experience of various countries shows that both segments would continue to grow unless there is economic stagnation,” said Jacques-Etienne de T’Serclaes, partner at PWC specializing in global retail. India and Cuba are the only major countries where retail is not open to foreign direct investment (FDI), he said soon after releasing the report.
Titled “The Rising Elephant: Benefits of Modern Trade to Indian Economy” — the report has been jointly done by PWC and the Confederation of Indian Industry (CII).
While apprehensions about job displacement are misplaced, consumers and the economy will benefit significantly, says the study. Wastage would be checked, especially in the case of food, due to improved efficiencies and establishment of logistics chains across the country.
Foreign investors would be keen on investing in India in collaboration with Indian partners, said Krish Iyer, member of CII’s national retailing committee and CEO of Piramyd, a Mumbai-based retailer.
“Calibrated opening up of the sector to foreign investment was a good idea and the government should not keep the doors closed for FDI. The government should also strengthen the domestic industry by granting retail the status of an industry,” Mr Iyer felt. This would help in getting easier access to finance and various other problems would also be addressed.
As of now, retailers have to pay higher power tariffs as applicable to commercial establishments rather than the lower rates available for industrial consumers.
Since FDI has been allowed in real estate, it is felt that foreign investment in retail would result in multiplier effect on the economy.
“If foreign investment can flow into real estate, it can enter retail too without harming the economy. At the current juncture, the Indian economy can sustain the growth of both organized as well as unorganized retail,” said Mr N.V. Sivakumar, retail and consultancy leader at PWC.
The industry needs large investments — estimated to be around Rs250 billion — to meet the growing needs of middle class consumers and domestic investment alone may not be adequate. — By arrangement with the Times of India
