ASSOCHAM, has suggested opening up of the retail sector to Foreign Direct Investment (FDI) in a ‘calibrated manner.’

  “The calibrated approach will give enough breathing period to domestic retailers to prepare and face their competitors such as Wal-Mart and the like and have a proportionate share in the retail sector,” the ASSOCHAM said.

The chamber said a study has projected that organised retailing in India is likely to touch $23 billion by 2010. Currently, organised retailing is estimated between $7.5 billion to $8 billion.

The Chamber is also of the opinion that since organised retail is emerging the fastest growing sector of Indian economy, it still occupies about 50 million sq ft of quality retail space in organised sector, the space requirement of which could well exceed beyond 150 mn sq ft by 2012. 

Based on a survey among its members on the issue of opening up of domestic retail to FDI, the ASSOCHAM President, Venugopal N Dhoot has suggested that the government should consult the stakeholders before any policy announcement.

Hurdles
Mr Dhoot said that the domestic players suffer due to infrastructure - the biggest bottleneck being prohibitive prices of large retail spaces in the upmarket or central locations in the large Indian cities.    “This is primarily because the private holdings are fragmented and the impact of the Urban Land Ceiling Act. Also the pro-tenancy Rent Control Acts are leading to exceptionally high prices in cities,” he said.

Bureaucratic hurdles and high capital cost also place the domestic retailing firms at a disadvantage against MNCs who have over the years placed efficient chains in order at a low capital cost.

It is estimated that for opening a single store in the country as many as 13 licences are required.
“Absence of single window clearance also acts as an impediment to retail growth,” he added.