Commenting on the findings, Rajan Divekar senior director Deloitte in India said: “...Given the recent policy flip-flop related to FDI in multi-brand retail, both global retailers as well as existing Indian organised sector retailers appear to have adopted a cautious ‘wait-and-watch’ approach before committing fresh investments”
New Delhi: India's retail sector faces a ‘bit cloudy’ outlook due slow growth along with persistent inflation and the government’s decision to hold back FDI in multi-brand segment, reports PTI quoting a report by Deloitte Touche Tohmatsu (DTTL).
‘The 2012 Global Powers of Retailing’ report by the consulting firm DTTL suggests that retailers will, however, find some silver linings as softening commodity prices will help in improved profit margins.
“The outlook for India (retail sector) is a bit cloudy as the economy is clearly slowing, following a period in which monetary policy was tightened to fight inflation... it did not bring the inflation down,” the report said.
Commenting on the findings, Rajan Divekar senior director Deloitte in India said: “...Given the recent policy flip-flop related to FDI in multi-brand retail, both global retailers as well as existing Indian organised sector retailers appear to have adopted a cautious ‘wait-and-watch’ approach before committing fresh investments.”
He, however, said the Indian retail sector offers significant potential for growth of modern trade.
India also has a set of obstacles that includes a high degree of trade protection, continuing regulation of labour markets and uncertainty regarding the future of the FDI policy related to multi-brand retail, it said.
Meanwhile, Indian retailers are customising and fine tuning their business models across retail formats to ensure that there is a balance between store expansion and profitability, Mr Divekar said.
“The recent liberalisation permitting 100% in single brand retail is a welcome sign especially for select luxury/niche retailers,” he added.
The report, however, said one positive effect of slower global growth will be the continued dampening of commodity prices.
“For retailers, this means some improvement on the cost side of the ledger while retail price inflation in some economies presents an opportunity for improved profit margins, even in the context of slow topline growth,” it said.
Revival of the proposal to permit 51% FDI in multi-brand retail could bring in a positive impact on the retail sector as well as the Indian economy, it added.
“The Reserve Bank, while framing its monetary policy, will have to take into account not only the decline in food inflation and the headline inflation, but also factor in the manufactured inflation,” chairman of the Prime Minister’s Economic Advisory Council, C Rangarajan said
New Delhi: Sounding a note of caution, the prime minister’s economic advisory panel today said the Reserve Bank of India (RBI) should take into account inflation of manufactured goods, which has shown only marginal decline, while deciding to lower policy rates at its monetary review next week, reports PTI.
“The Reserve Bank, while framing its monetary policy, will have to take into account not only the decline in food inflation and the headline inflation, but also factor in the manufactured inflation,” chairman of the Prime Minister’s Economic Advisory Council, C Rangarajan, told PTI.
His comments came after headline inflation, as measured by Wholesale Price Index (WPI), fell to a two-year low of 7.47% in December, from 9.11% in the previous month.
Mr Rangarajan said more steps are required to further moderate the inflation.
“The decline in headline inflation is mainly on account of the fall in food inflation. However, the decline is very small ... Further steps will be required (to control inflation),” he said, without giving more details.
As per the official data, prices of food items rose at a lower rate of 0.74% in December, compared to 8.54% expansion in the previous month.
However, inflationary pressure continued in manufactured items, which have a weight of around 65% in the WPI basket.
Prices of manufactured products went up by 7.41% year-on-year in December, as against 7.70% in the previous month.
Earlier in the day, finance minister Pranab Mukherjee also said that inflation of manufactured goods continued to be a matter of concern but hoped that overall inflation would come down to 6%-7% by March end.
“The manufactured inflation and inflation in the power group of items have also declined though only marginally, therefore, continued to be a cause of concern,” Mr Mukherjee said.
RBI is scheduled to announce its third quarterly economic policy review on 24 January.
Barring December 2011, headline inflation had been above the 8% mark since January 2010, while it was above 9% since December of the same year.
The apex bank has already hiked key policy rates 13 times since March 2010 to tame inflation. However, it went for a pause in rate hikes in November and hinted at loosening the tight monetary policy in future if inflation moderates.
India Inc has said the string of rate hikes, which have raised the cost of borrowing, has acted as a dampener to fresh investment and hindered growth.
“As of now, the fertiliser ministry is not working on decontrolling the urea sector and there is no such proposal to increase urea prices sharply by 40%,” fertiliser secretary Ajay Bhattacharya clarified
New Delhi: The fertiliser ministry today rejected reports that it plans to decontrol the urea sector and effect a steep 40% hike in retail prices of the product over the prevailing rate of Rs5,310 per tonne, reports PTI.
Urea is the only fertiliser product that remains under full price control of the government. The government had partially freed phosphatic and potassium fertiliser prices last fiscal by announcing the Nutrient-Based Subsidy (NBS) Policy.
“As of now, the fertiliser ministry is not working on decontrolling the urea sector and there is no such proposal to increase urea prices sharply by 40%,” fertiliser secretary Ajay Bhattacharya told PTI.
His statement came in response to media reports that the government is mulling an increase in retail prices of urea by as much as 40%.
At present, the fertiliser ministry is seeking inter-ministerial comments on the draft NBS policy prepared by the Committee of Secretaries (CoS), which suggested partial freeing of the retail price of urea.
Mr Bhattacharya said, “Our minister has gone on record against any decontrol of the urea sector.”
“There are various views from different ministries on the proposed NBS policy in urea, but the final decision will be taken at the Cabinet level,” he noted.
According to sources, inter-ministerial differences persist over decontrol of the urea sector, with strong opposition to the move from the ministries of agriculture and fertiliser.
Last year, minister of state for fertiliser Srikant Jena had said: “The government is apprehensive about the NBS policy on urea. Parliament members, people and farmers are complaining about rising prices of phosphatic and potassium fertilisers (decontrolled fertilisers).”