Factbox - Key facts about retail sector

MUMBAI Fri Aug 2, 2013 2:36pm IST

A worker cleans the floor of a V-Mart retail store in New Delhi April 6, 2013. REUTERS/Adnan Abidi/Files

A worker cleans the floor of a V-Mart retail store in New Delhi April 6, 2013.

Credit: Reuters/Adnan Abidi/Files

Stocks

   

MUMBAI (Reuters) - India further eased foreign investment rules in retail on August 1 in a renewed attempt to attract global supermarket chains like Wal-Mart Stores Inc (WMT.N) and Tesco (TSCO.L).

Foreign retailers have been keen to enter India's $500 billion retail market since the country allowed overseas investment in its supermarket sector in September 2012 but ambiguity around entry rules has kept them away.

The issue also remains politically controversial because of worries that millions of small shopkeepers could go out of business and India has so far not received a single application from any global retailer.

Following are the key highlights of India's efforts to reform retail sector.

* November 2011 - India allowed foreign supermarket chains to enter the country and own up to 51 percent in their Indian operations in an attempt to bring in much needed capital from abroad and build its poor infrastructure supply chain.

It also allowed single brand retailers like Swedish furniture giant IKEA to own 100 percent of their business in India.

* December 2011 - The government put the retail reform on hold, backtracking from its boldest measures in years in the face of political backlash from allies and opposition parties over worries that millions of small shopkeepers could go out of business.

* January 2012 - India formally eliminated ownership restrictions on foreign investment in single-brand retail but required that companies source 30 percent from small local firms.

* June 2012 - New Delhi began clearing the ground for a new push to open up the supermarket sector amid souring investor sentiment, double-digit food inflation and the threat of a credit-ratings downgrade.

* September 2012 - India revived the retail reform, allowing foreign supermarkets to buy up to 51 percent in a local partner with restrictions around sourcing and investment in an effort to appease political opposition. Local sourcing requirements for single brand retailers were diluted.

* June 2013 - The government issued a clarification and said global supermarket operators can not acquire existing assets of Indian companies and that the initial mandatory $100 million investment to set up supply chain infrastructure and stores must be in new assets.

* August 2013 - India relaxed sourcing and investment rules for supermarkets. It allowed retailers to meet 30 percent sourcing requirement over 5 years initially and said they only have to invest 50 percent of an "initial" mandatory investment of $100 million in setting up cold storages and warehouses.

Following are some facts on the retail sector in India:

* India's population is around 1.2 billion and the retail sector sees annual sales of $500 billion, with nearly 90 percent of the market controlled by tiny family-run shops.

* Organised retail makes up less than 10 percent of the market but is expanding at 20 percent a year, driven by the emergence of shopping centers and malls and a middle class of close to 300 million and whose numbers are growing at nearly 2 percent a year.

* India allows full foreign ownership in single-brand retail and cash-and-carry or wholesale ventures. It allows 51 percent ownership in supermarkets.

(Reporting by Nandita Bose; Editing by Miral Fahmy)

FILED UNDER:

REUTERS EXCLUSIVE

Reuters Showcase

Documents' Leak

Documents' Leak

India widens oil leaks probe to defence ministry  Full Article 

Jim O’Neill Interview

Jim O’Neill Interview

'India can become world’s fifth-largest economy by decade’s end'  Full Article 

Food Security

Food Security

India will not cut multi-billion dollar food handout programme - PM  Full Article 

Ola's Expansion Drive

Ola's Expansion Drive

Taxi group Ola steps up expansion drive  Full Article 

Sahara Saga

Sahara Saga

Sahara's Grosvenor House hotel in London put up for sale   Full Article 

Suzlon Energy

Suzlon Energy

Suzlon expects to turn profitable in fiscal 2016: chairman   Full Article 

Eicher Motors Stake

Eicher Motors Stake

Volvo selling up to $300 mln worth of Eicher shares  Full Article 

Beef Trade

Beef Trade

Maharashtra clamps down on beef trade through new act  Full Article 

Budget 2015

Budget 2015

Budget announcements and reactions from the industry  Full Coverage 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage