India slips in retail development

Brazil tops for the third consecutive time, India occupies 14th position

India slipped to the 14th position on the Global Retail Development Index for 2013, while three Latin American economies — Brazil, Chile and Uruguay — topped the list. Brazil was on the top for the third consecutive time, according to a report by AT Kearney, a global consulting firm. India had occupied the fifth position in the report last year and was referred to as “on the radar” or highly favourable destination.

Economies such as Kuwait and Armenia made their way up in the list as ninth and 10th favourable destinations, respectively. China continues to hold the place in the top five destinations, occupying the fourth slot. Countries such as Mongolia have made their way up to the seventh position, compared to ninth position in 2012.

The slip for India has been attributed to the ‘bumpy’ policy scenario in India where two-thirds of states are still opposed to Foreign Direct Investment (in multi-brand retail), says the report.

“This is just the reflection of weakening confidence of the global retailers. But there is a need to look at business in long term. The political uncertainty will not last long,” says Rajnish Ohri, Managing Director, Corum India. Corum is a multinational company from Netherlands which has recently entered the Indian market.

The report also categorically mentions the current uncertainty around FDI as one of main reasons for the fall but acknowledges the fact the future is still bright for India. “With a country poised to take demographic advantage for the next 40 years, it would be a shame not to seize all of the opportunity “says the report.

“Even when the FDI policy has been cleared by the government there continues to be uncertainty over some key issues, there is an image these days that business in India is inhibited by various administrative hurdles,” according to a retailer. The report takes into account four broad factors of country and business risk, market attractiveness, market saturation and time pressure while rating the countries.

“Brazil continues to top the list because it has been proactive with decision and policy issues. It also has huge civil problems but the policy for international investors has been clear. The direct investments in India have dried up”, said Gaurav Marya, Managing Director, Franchise India. Apart from falling on the Global Retail Development Index, India already ranks at 132rd in ‘ease of doing businesses’ lagging behind economies like Nepal and Bangladesh in a report released by World Bank in 2013.