Trilok Singh
1) The retail sector in the nation of 1.2 billion people is estimated to have annual sales of $450 billion, with nearly 90% of the market controlled by tiny family-run shops.
2) Organised retail, or large chains, makes up about 10% of the market, but is expanding at 20% a year. This is driven by the emergence of shopping centres and malls, and a middle class of close to 300 million people that is growing at nearly 2% a year.
3) India has recently allowed 100% FDI in single-brand retail subject to certain sourcing restrictions, paving way for global chains to have full ownership of their India operations. So far US-based coffee giant Starbucks has signed a memorandum of understanding (MoU) with Tata Coffee.
4) Earlier, the government had passed the measure to allow 51% FDI in multi-brand retail. However, it was forced to be put in on the backburner after vociferous opposition from other political parties who alleged that they had not been consulted on the matter. FDI in multi-brand retail is being seen as a key to get much-needed foreign funds into the country
5) India also allows 100% FDI in cash-and-carry, or wholesale, ventures. Restrictions on foreign investment in front-end retail exist because of opposition from millions of small shopkeepers who are valuable vote banks during elections etc..