FDI in multi-brand retail will result in investment of USD2.5 billion-USD3.0billion over next 5 years :CRISIL Research

The immediate and much-needed positive impact of Indian government reform measures will be on investment climate and business confidence. The resultant improvement in investor sentiment is expected to boost capital inflows, which will be aided by further easing of monetary policy by US Federal Reserve (QE3) and European Central Bank. The expected increase in inflows creates a strengthening bias to our call of the rupee at 53 to the US dollar by March 2013.

The decision to allow 51 per cent FDI in multi-brand retail will result in investment of USD2.5 billion-USD3.0 billion in the retail sector over the next five years, primarily into the food and grocery (F&G) vertical. Capital expenditure in the back-end supply chain will receive a boost given the mandatory 50 per cent investment clause. An efficient supply chain will enable direct sourcing of fruits and vegetables, which will boost farmer realisations by 10-15 per cent and still bring down retail prices by 15-20 per cent.



“Organised retail penetration (ORP) is expected to remain moderate at 10 per cent in 2016-17 compared with 7 per cent currently. Moreover, the share of foreign retailers in organised retail is not expected to exceed 10-15 per cent by 2016-17. Even in China, where the sector was opened up to FDI 15 years ago, foreign retailers have a share of only 25-30 per cent in organised retail,” said CRISIL Research.

The move to open up the aviation sector to FDI will, in the long run, draw more serious global players into the sector, given the size and growth potential of the Indian aviation market. However, addressing issues relating to taxes and levies on aviation turbine fuel will be critical to attract significant FDI into the sector.

(Source - CRISIL Research dated 18th Sept 2012)

>> Revised Guidelines- FDI in single-brand product retail trading in India

>> Full Guidelines - FDI in multi-brand product retail trading in India

>> Why Indian Govt decided to allow foreign investment in retail trade



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