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“Everyone is talking about a stable government and growth prospects of the country. But I do not feel there is any good news for the retail sector, especially when there is no clarity on foreign direct investment in the sector,” said Anshul Jain, CEO of DTZ India (dtz.com),the Indian arm of the global Real Estate consultancy company. Due to lack of clarity on the policy front, especially on allowing FDI in the retail sector, international investors are not ready to invest, he says.
The manifesto of the BJP released a few weeks ago explicitly made it clear that the party will not allow FDI in multi-brand sector, particularly in the food sector. Unless the government takes certain favourable decisions on this, the growth of the sector is unlikely, many experts feel. In all likelihood the party holding the trump cards is most likely to be BJP.
Investors, both domestic as well as international, are also not keen on investing in developing retail real estate, according to the international consultants Jones Lang LaSalle.
According to the Country Head Anuj Puri, “100 per cent FDI is allowed in development of commercial properties according to norms. The retail investor has to thus do all the ground work, including getting approvals for building layouts and infrastructure. Investors fear there are big challenges that come because of this policy. “Besides, there is no guarantee about getting the right retailers and the investors are skeptical about returns and unwilling to take risks,” he said.
The case with domestic private equity investors is similar and they are being forced to look at other options in the real estate sector. There was a time when one witnessed huge investments in mall development from domestic players. But due to the risks and challenges like delay in getting approvals, rising costs and lower returns, even they are becoming cautious, according to Puri. Only if the existing norms are tweaked would the industry move on the growth path,” he says.
Source: Hindu Businessline
Development of the retail sector through the entry of foreign retail supermarkets is expected to boost the sales and consumption of wines-both domestic and imported because of the long global experience of these super markets- editor |