FDI in retails…the news came with a bang igniting a war between Manmohan Singh and dearest Didi Mamata Banerjee. For some, the reform announcement became a boon and for some it’s all about downgrading and threatening the common man in India.
Well, for Walmart, who has been waiting for years to open its retail outlet in second most populous country in world , FDI in retail was a welcoming news. But do you think it will be easy for Walmart to sustain in market where kiranas and Indianised version hypermarket are struggling?
This is the question that most of the industry experts are debating. They are of the opinion that the journey for Walmart to India would not be smooth as it would have been some five years back. If the concept of FDI retail was given a nod then, Walmart would not had to face so much of issues as they are going to face now. Reaping profit is going to be hard for Walmart in India than in China where restrictions imposed by government are less than in India.
Walmart who is popular for cash and carry bag stores will be allowed to do business in India under the same old rules where even local hypermarket chains struggle.
According to new rules, state governments are given freedom to choose if they want foreign players in and even if they are allowed, they can set the outlet only in cities having 1 million populations. This rule can restrict the entry of Walmart to some of the states in India where Communist party has a strong hold….who are against FDI in retail.
In addition Walmart may need to invest at least $100 million in which half will should go for rural development and for sourcing 30-40% of goods from local small and mid-sized suppliers. Walmart which earns their profit sourcing from their trusted suppliers will lose its game here.
Walmart……it’s really hard time for you in India…..