A day ahead of the critical state election results, retail majors had little clarity on whether the poll outcome would translate into multi-brand FDI or not. But the optimists among them argued that government was committed to reform and would introduce FDI soon.
Since December 5, when the government put on hold the move to allow 51 per cent FDI in multi-brand retail, 13 days after the Cabinet decision to open the sector, global and domestic retail chains have been looking for a solution in the state election results, mainly that of Uttar Pradesh.
With no sign of a clear majority and political parties, including Congress, claiming they would either form the UP government or sit out as Opposition, most retail companies preferred to wait for the result before hazarding a guess on the fate of FDI in multi-brand retail. But, the mood within these companies indicated that many business meetings and appointments had been put off till after Tuesday, when the results would be out.
While companies were a confused lot on retail FDI, the trade associations had their plans in order. A day before the election results, these representatives of mom and pop stores were back with their agenda to burn ‘FDI effigies’ and protest across the high streets of the country.
With protests lined up on March 7, 16, 23 and 30, Praveen Khandelwal, secretary general, Confederation of All India Traders, said, “We want the issue to be alive while Parliament is in session.”
Arvind Singhal, chairman, Technopak Advisors, pointed if Congress does poorly in UP, more populist measures would be rolled out by the Centre, rather than taking any pragmatic reform steps. And even if multi-brand FDI is allowed, it will come with tough riders, just like in the case of single brand, according to Singhal.
Bharti Walmart, a joint venture between American major Walmart and India’s Bharti group, refused to comment on the impact the poll results could have on the retail FDI decision. The JV operates cash-and-carry business in India, but Walmart wants to foray into India in multi-brand retail in a big way. While no FDI is allowed in multi-brand, there’s no restriction on foreign investment in cash-and-carry or wholesale business. Recently, the government hiked the FDI limit in single brand retail from 51 to 100 per cent.
Future Group Chief Executive Kishore Biyani, who’s been vocal about multi-brand FDI for long and is learnt to have been in partnership talks with foreign chains too, told Business Standard, "I think the government is committed to reforms. The government will do something about this (FDI in multi-brand retail) after the Budget and elections. I am hopeful on this.”
A Future Group executive, on the condition of anonymity, said, “We are not thinking about whether government will clear FDI in multi-brand retail or not. When it happens, it will happen.”
French retail giant, Carrefour, which too is operating cash-and-carry stores in India in the absence of permission to open multi-brand outlets here, did not comment on how election results may change the multi-brand FDI scenario. But it is fully focused on expansion of the existing business in India. With its talks failing with an Indian group to form a venture for multi-brand retail, Carrefour may not be in a hurry to explore new tie-ups.
Govind Shrikhande, managing director, Shoppers Stop Ltd — the largest operator of department stores, said, "I do not expect anything on this front (FDI) immediately. What we are hearing is that they could announce something or set a goal post in the Budget.”