FDI in retail to boost SME business: CII

The recent approval of the Union Cabinet on foreign direct investment (FDI) into retail will bring in more business opportunities for small and medium enterprises (SMEs).

“The recent decision of the Cabinet to open the multi-brand retail sector to FDI is a welcome move, and it will offer wider choice with better quality to consumers and bring in more business opportunities for SMEs," said Jay Galla, chairman, CII-Andhra Pradesh and managing director of Amara Raja Batteries Ltd.

With large investments expected in this sector, global retailers would leverage the Indian manufacturing base more, once they are allowed to set up local operations here.

The organised retail is expected to increase affordability for consumers. The quality of products is expected to improve with greater transparency and easier monitoring of adulteration, he said.

Besides, this development would allow the retail sector to build shopping facilities, comparable internationally, have a wider choice of retailers within the malls who can provide a greater choice and stock to consumers, Galla added.

"There is stipulation of 30 per cent more buying from SMEs in India. As organised retail spreads, bulk buying from SMEs will increase thereby meaning more business for SMEs," said Y Harish Chandra Prasad, past chairman, CII AP.

The organised retail and kirana shops will co-exist, as they do developed and developing economies around the world, he said.

The small retailers will increase their effort to enhance their customer proposition through steps like adding new product lines, brands, better display, renovation of the store, introduction of self service, enhanced home delivery, more credit sales, acceptance of credit cards, etc, he said.