Indian shoppers would welcome global retailers

18 August 2010

NEW DELHI: Shoppers in India are keen for global retailers like Wal-Mart, Tesco and Carrefour to establish a greater presence in the country, a study has found.

The Birla Institute of Management Technology conducted a survey of 660 people to gain an insight into popular attitudes towards extending the freedom provided to multinational chains.

Overall, 84% of participants agreed that foreign direct investment should be allowed in "multi-brand" stores like supermarkets, which is currently not permitted.

Rather, overseas corporations are limited to taking a 51% share in joint ventures with local firms that sell just one brand of goods, or 100% stakes in wholesale outlets.

Kartik Dave, an associate professor at the Birla Institute, suggested a revision of the existing arrangements was likely to prove advantageous for shoppers in the rapidly-growing market.

"Customers are definitely going to benefit on price, and better quality of service," he said.

Wal-Mart, the world's biggest retailer, already runs cash-and-carry warehouses in India, and Raj Jain, managing director of its joint venture with Bharti Enterprises, revealed in July that it will act quickly if rules are modified.

"If the laws of the country change to opening up to foreign direct investment in retailing we could open hundreds of stores," he stated.

"Every developing country, including China, Brazil and Mexico, has been through this, and even today in China after 15 years, 80% of retail is unorganised. The end consumer will benefit a lot as prices will come down."

In a recent submission to the Department of Industrial Policy and Promotion concerning this matter, Carrefour, the French hypermarket giant, also argued significant gains may result from this process.

"If Carrefour starts its retail operations in India, in about ten years, we would provide direct and indirect employment opportunities to approximately 20,000 people in the stores itself," the company said.

Other positive developments might include controlling inflation "by offering more competitive and rationalised prices of products to consumers and reduction of wastage across India's farm-to-fork supply chain," Carrefour added.

Data sourced from Bloomberg; additional content by Warc staff