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Retail Inc expects $8-10 bn investments in 5-10 years

These include Carrefour of France,Tesco of the UK,Metro Cash & Carry of Germany and Wal-Mart of the US.

Written by ENS Economic Bureau | Mumbai |
November 26, 2011 1:28:18 am

The retail sector is expecting fresh investments to the tune of $8-10 billion (up to Rs 50,000 crore) following the Union Cabinet’s decision to allow 51 per cent foreign direct investment (FDI) in the sector.

Once the government puts the framework in place,global retail chains — already in talks with top Indian companies — are expected to make their foray. These include Carrefour of France,Tesco of the UK,Metro Cash & Carry of Germany and Wal-Mart of the US.

Metro Cash & Carry,which started India operations in 2003 with two distribution centres in Bangalore,now has five wholesale centres. Bharti has tied up Wal-Mart to set up cash and carry wholesale stores in India.

According to a report authored by Boston Consulting Group (BCG) and CII,the current size of organised retail in the country stands at close to $28 billion or 6-7 per cent of the total retail market and is estimated to grow to 21 per cent in 2020,the market size expanding to $1.25 trillion. The added investments from key overseas players would enable the sector play a key role in economic growth.

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The study said that farmers in India currently get a relatively small share of the retail price. As an example,tomato farmers earn only 30 per cent of the retail price while in more developed markets,it ranges between 50-70 per cent.

Organised retail can increase the efficiency of the supply chain by increasing price realisation for farmers by direct sourcing,capacity building by providing know-how and capital,reducing wastages through consolidation and investments in technology.

The CII said the opening the retail sector to foreign investors would enable the sector to realise its potential of $ 260 billion by 2020 and shift the benefits to smaller towns and cities. The beneficiaries of this move would include all stakeholders in the retail value chain — producers,consumers and employees.

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First published on: 26-11-2011 at 01:28:18 am
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