Retail sector wants industry status, hike in FDI limit

Organised retailers in the country have said that the sector should be given industry status, and have called for easing of foreign investment norms in the forthcoming Budget

Barely recovering from the slump in the economy, organised retailers in the country on Wednesday have said that the sector should be given industry status, and have called for easing of foreign investment norms in the forthcoming Budget.

"Industry status has been a long-standing demand of the retail sector. Besides, we also want a relaxation in the foreign direct investment (FDI) norms," Retailers Association of India chief executive Kumar Rajagopalan told PTI.

Sharing similar views, Koutons Retail India chairman DPS Kohli said, "Industry status has been a recurring demand of the retail sector for many years since only then will the retailers be able to fully enjoy the benefits of organised financing, insurance and fiscal incentives."

According to industry figures, only around 5% of the estimated $450-billion Indian retail sector is currently organised.

Calling for easing of FDI norms, Mr Rajagopalan said, "No industry in India has grown without FDI participation and for retail to emerge as a big player, more FDI should be allowed." Besides, he said that even if FDI norms are not relaxed in the Budget, the government must give a clarification on foreign institutional investors (FIIs) and foreign private equity (PE) funding route as there is a lot of ambiguity.

Mr Kohli said that clarity on the issue will help Indian retailers raise funds from abroad as the global liquidity condition is showing signs of improvement.

At present, the government allows 51% FDI in single brand retailing and prohibits any foreign investments in the multi-brand segment.

Delhi-based Vishal Retail's chief executive Ram Chandra Agarwal said, "Easing of FDI norms will bring much needed funding which is very important for the sector at this time. Besides, it will also bring along more competition."

He also said that the government should rationalise the tax structure and eliminate multiple layers of taxation, adding that such measures will help in making the sector more organised.

Franchise India chairman Gaurav Marya said that the government should make a special budgetary allocation to franchising businesses in its small and medium enterprises (SME) from the finance allocated to financial institutions.

"There are 3.5 crore small and medium business units in India of which retail sector constitutes 1.8 crore units. Credit is a major hurdle in growth of franchising," he said.

Supporting the stand of the retail sector players, global consultancy firm Ernst & Young (E&Y) said that funding is the biggest aspect for successful growth of the segment.

"Allow more FDI and grant it industry status. Both the steps will help retail to access capital and become competitive and will ultimately help the consumers by giving them more choices," E&Y partner and industry leader for retail and consumer product practice Pinaki Ranjan Mishra said.


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The textile imbroglio: Who’s spinning a yarn?

Union textiles minister Dayanidhi Maran has said that there is no unemployment in the sector. However, AEPC claims that nearly 4 lakh jobs have been lost in the industry since April last year

Union textiles minister Dayanidhi Maran has denied that there is unemployment in the textile industry. However, the Apparel Export Promotion Council (AEPC), the official body for apparel exports and a nodal agency sponsored by the ministry, does not agree with Mr Maran’s statement.

AEPC chairman Premal Udani said that the textile industry is suffering from unemployment due to an 8% drop in exports in the textiles and clothing sector. “We are predicting that there have been about nearly 4 lakh jobs lost in the textile sector,” Mr Udani said.

Earlier, while speaking at a Confederation of Indian Industries (CII) conference in Mumbai, the textiles minister said,”Frankly, this (the statement that there is unemployment in the textile industry) is wrong. Companies are running short of labour.”

Mr Maran said that textile companies are now asking for talented labour, as workers are moving into villages due to the National Rural Employment Guarantee Act (NREGA) and firms are seeking NREGA funds.

However, the minister ruled out the possibility of using NREGA funds for the textile sector. Mr Maran said, “How can we have NREGA when most of the units run by the industry are in the outskirts of Mumbai, Pune, Delhi and Bengaluru?”

According to NREGA, there is a guarantee of 100 days of employment in a year to one member from each rural household. Since its inception in February 2006, at least 41.5 million households have benefited from the scheme.

AEPC chairman Mr Udani had also met Mr Maran and asked him to retain the export incentives given by the Union government to the textile industry. “The Union government needs to continue with the sops as recovery is still fragile. The incentives given last year must remain till the end of this year,” Mr Udani said.

However, at the CII conference, Mr Maran had also told the textile industry to concentrate on the domestic market and stop clamouring for further incentives. “There is speculation in the industry that profits have been shrinking. (But) India suffered recession only for nine months. Now most of the textile companies are posting profits but there is still scope for improvement. Currently, more than 50% of production is exported, but the industry also needs to focus on the domestic market,” the minister said.

There has been a steep drop in textile exports from India over the past year, on account of falling demand in the US and the EU, which have been the two major markets for Indian textiles products.



Shadi Katyal

7 years ago

Why there any surprise in 2 statements. Ministers live in closed environment and
they tell the people what they think will keep them in power. They are least concerned with poor but only for their own power. He can say easily he was misled by his mandarin.
The question is simple Does anyone cares for the Nation ???

Food prices may ease soon, says finance minister

Although the government remains concerned over surging inflation, it is optimistic that food prices will cool down over the next few months

The government on Wednesday described the surge in inflation as disturbing, but was also confident that food prices that were fuelling the price rise would ease in a few months—by the time the rabi crop reaches the market, reports PTI.

On the sidelines of a seminar on transfer pricing, finance minister Pranab Mukherjee told reporters, “That (rising inflation) is a matter of concern, no doubt. I am afraid the 8.5% rise in (the) wholesale price index is disturbing.”
He, however, exuded confidence that the inflation rate will ease in the next few months.

Inflation rose to over a 13-month high of 8.56% in January from 7.31% a month ago, driven mainly by higher food prices.

Food inflation rose for the third successive week and moved closer to 18% in the week ended 30th January.

The spiralling rise in food prices has been the primary reason behind surging inflation. It has forced the government to take necessary action on the supply side but it will take some time for the measures to take effect.
"We have taken adequate measures on the supply side which will take some time to have the pressing impact on rising prices, particularly of essential commodities. I do hope that over a period of few months, it will be possible to have a moderate rate of inflation," Mr Mukherjee added.


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