SMEs welcome FDI in retail

BANGALORE, INDIA: The Retail sector of India is vast, and has huge potential for growth and development. Individuals, stores, commercial complexes, agencies, companies and organizations, etc., all comprise the Retail industry in the sector of economy. They are involved in the business of selling or merchandising of products or goods which are diversed by nature to the end-user 'consumers'. However, the opinions are divided among SMEs.

Prashanth K, C.E.O, 4SPL Technologies India Pvt. Ltd. said "I think FDI in retail will revolutionize two major areas: Supply Chain Management and Storage Management and will benefit both the farmers and the customers. Since India is an unique country compared to the other developed countries, we will see a lot of customized and localized solutions being developed in the said areas by the SME sector. With respect to software, SME's will have greater role in providing solutions in bringing together the farmers, retailers, vendors and the customers by leveraging the mobile and cloud technology to lower CTO. This will enable retailers who have adopted these services to gain competitive advantage by process innovations, lowering costs and building scale."

The states that have agreed to allow foreign investment in multibrand retail are Andhra Pradesh, Assam, Delhi, Haryana, J&K, Maharashtra, Manipur, Rajasthan, Uttarakhand and the UTs like Daman & Diu and Dadra and Nagar Haveli, while states such as Bihar, Karnataka, Kerala, Madhya Pradesh, Tripura and Orissa have expressed their reservations.

Deepak Agarwal, CEO of Gron Stockholm, says: "Today, FDI in retail is must for India because it will not only create direct employment, relations of business, better product for consumer etc. but also it is a bilateral act i.e. if India does not open its gate internationally, naturally Indian businesses can have negative effect. So, India will have to agree to this logical international demand".

Edvin K Varghese, Founder & CEO, Appface Technologies Pvt Ltd said, "FDI in retail would bring a positive change in the country similar to the economic reforms ushered in by the government in 1991. It brings great opportunity for most of the SMB segment including farmer co-operatives, trucking industry, cold chains, storage facilities, and will have a positive impact on generating job opportunities. Today 40 pc of the food produced by the farmers are wasted. It has become common sight of excess farm produce rotting in whole sale markets, Highways and in FCI go downs."

"The New Investments proposed in the retail industry will bring in a wealth of experience gathered by the multinational brands into the country. The SMB segment that can leverage technology stand to gain the most by providing ancillary services like logistics, maintenance, Infrastructure, Information Technology services etc.."

"IT Services would be required to link up farm lands in villages with the Large Format Stores in the big cities. Mobile Technology services would be required in the logistics space. Appface Technologies Pvt Ltd is in discussion with some of the leading logistics brands in the country to provide infrastructure for their back-end services.The new farming techniques pioneered by Multi brand retail companies and reduction in wastage of farm produce by efficient cold chains will drive down the prices which will have a positive impact on inflation," he added.

The government says foreign retailers can only open stores in states that have agreed to allow FDI in multi-brand retail. The cabinet said OK for 51% FDI in multi-brand retail sector and 100% FDI in single brand. On one hand farmers will benefit from it but on the other hand small traders feel they will not be able to withstand the competition. Will India in general benefit from this step? Lets wait and watch!