The decision to open up the supermarkets sector to foreign chains such as WalMart — part of a 24-hour policy flurry that brought more measures to liberalise the economy than has been seen over the last eight years in government — is being praised by a broad cross section of Indian businesses, from apex bodies to supply analysts.
According to R.V. Kanoria, president of the weighty Federation of Indian Chambers of Commerce and Industry, the decision will usher in a retail revolution.
“There are a number of benefits that will flow from this decision. We will see infusion of new technology across the agriculture value-chain, as well as improvement in the back-end infrastructure,” he said.
“There will be a multiplier effect in terms of employment generation and domestic manufacturers will benefit as they integrate with the supply chains of global retail majors. Consumers will have a wider choice and get better deals.”
There has been a significant lack of investment into the logistics of the retail chain, leading to inefficient market mechanisms. And the lack of a proper storage infrastructure has been one of the most alarming of these infrastructure gaps.
“The technology being used in Indian retail is largely obsolete and does not meet international standards, resulting in poor efficiency on the supply side and average consumer experience on the demand side,” said Pankaj Renjhen, managing director of Jones Lang LaSalle’s retail think tank. “
“FDI will be a powerful catalyst to the required growth in the retail industry and, in the long-term, will prove beneficial to all the major stakeholders. There will be investment in storage and transportation infrastructure, technology and supply chain operations.”
Over the coming week, FoodNavigator-Asia will be compiling more reaction to this significant move by the Indian government. We appreciate your input, so please do let us know your thoughts on the issue in the comments below.