NEW DELHI: The Indian retail sector in India, which is approximately $ 200 billion strong, is steadily growing despite some restrictive policies and ham-handed handling of the industry by policy-makers, according to KSA Technopak India chairman Arvind Singhal.
Commenting on the size of the Indian retail market, he says that there is no debate on the issue: "Whatever the consumer spending is in India is the size of the retail market as whatever we buy is through a retail channel. If we include services, then the size of the market is $ 200 billion."
KSA Technopak is organising a three-day retail summit here, which kicked off in Delhi today with industry workshops that saw over 400 delegates from organisations spanning the entire gamut of India's retail industry participating.
Dwelling on the booming retail industry, Singhal in an interview with Indiantelevision.com said that the per capita income is increasing and there is an overall increase in disposable income. In such a scenario, he pointed out that people have to find space to buy things.
To hammer in his point of options before the people, Singhal pointed out that in Delhi, for example, the local weekly markets ('haats') are "flourishing rather than vanishing." He adds, "Simply because there is no modern space available and politicians don't understand this fundamental fact (while opposing foreign direct investment in the retail sector)."
Making a strong case for foreign investment in the retail sector, Singhal was emphatic that such investments would not swamp indigenous companies.
"Take the textile industry, for example. There is no restriction on FDI as far as this sector is concerned. However, India picked up less than $0.5 billion of FDI in the last 12 years, whereas China picks up about $8 billion per year. This answers the question that no one is waiting here to come and kill Indian industry. FDI is to do with the perception about the attractiveness and stability of the country," Singhal counter-punched the critics of throwing this sector for foreign investment.
Pointing out that the Indian consumer too has evolved in the last decade or so demanding good services that are "friendly and convenient", Singhal said arrival of international franchisees like McDonald's "has not managed to eat into the shares of Indian players like Haldiram's."
According to him, "There is absolutely no threat at all from international franchisees entering into India."
While Singhal and his company were trying to champion the cause of the retail industry, earlier in the day today commerce minister Kamal Nath told an audience at an apex chambers of commerce that any policy decision relating to FDI would be taken keeping in mind that Indian retailers don't get "displaced."
"The nature of the retail sector in India is too complex for a hasty decision and the fixation of permitting or not permitting FDI is misplaced," Nath said at a seminar on 'Retailing in India: FDI and Policy Options for Growth,' organised by the Federation of India Chambers of Commerce and Industry (FICCI).
Nath cautioned that the thrust to the retail sector by the government would have to be seen in the overall context of the sector specific policies. This goes with the overall national objective of rejuvenating specific targeted sector, including the rural sector.
Asked what sort of investment is being made in developing shopping malls and retailing that's enhancing the `total' shopping and entertainment experience for Indians, Singhal said the company estimates it would be approximately Rs 150 billion.
Meanwhile, Singhal stressed that the retail summit has seen a level of maturity in the last few years with participation from many serious companies in the market.
"Consumer products companies have started to realise that they need to understand the retail industry much better than they have done so far. People expect a lot more consistency in the format of our summit. Our workshops have also now reached some kind of a steady state," Singhal says.
He stressed that it is not their core agenda to maximise revenue from the event, but create awareness about the industry and provide a platform.
"Our objective is not about increasing the number of people attending our summit, instead it is to bring those people on board whom we would like to consult with and who are significant in this sector for consumer goods," Singhal said.
KSA Technopak is the Indian subsidiary of Kurt Salmon Associates. Technopak was started in 1992 as a management-consulting firm focused on the consumer product niche. In late 1992, it commenced a working relationship with Kurt Salmon Associates, which developed into a joint venture in 1996, when KSA took an equity position in the Indian practice.
