London: The UK-India Business Council (UKIBC) Friday welcomed India's reforms to FDI in multi-brand retail, and said the reforms would be "highly beneficial" for both Indian farmers, SMEs, and consumers and for UK businesses.
Noting that several conditions had been built into the reforms to ensure that Indian consumers benefitted from foreign investment, the UKIBC, however, said investors will be restricted to states that wanted to implement the reforms, such as Maharashtra, Rajasthan, Delhi, and Uttarakhand.
Besides, foreign investors would be required to invest in cities with populations of at least one million, of which India currently has 53, it said a statement.
UKIBC said: "Although these conditions will require careful considerations by investors, the immediate response from UK and Indian business leaders is that the requirements are not likely to be 'deal-breakers'."
The UKIBC said it also welcomed the new flexibility in the requirement that 100 percent foreign-owned single brands must source 30 percent of their products from Indian SMEs.
International firms seeking a wavier on this sourcing provision now have the option of establishing their own factories in India.
Richard Heald, Chief Executive of UKIBC said: "This creates significant opportunities for the UK retailing sector to make great strides into India.
"India is hungry for investment, mainly in terms of capital and expertise above and beyond what the Indian Government and private sector can provide."
He added: "India suffers from a chronically fragmented supply chain, to such an extent that some 30-40 percent of food rots before it even reaches the stores.
"Allowing the Walmart's, Tesco's, Carrefour's of the world into India will stimulate the retail market to reduce wastage, improve productivity and lessen price spikes."
Patricia Hewitt, Chairperson of UKIBC said: "We warmly welcome this decision, which is the second major liberalisation of the retail market in less than twelve months.
Greater FDI in multi-brand retail will accelerate improvements in India's supply chain - that will be good for India's consumers, good for India's farmers and good for UK-India trade and investment, she said.
Paresh Parekh, Partner, Tax & Regulatory, at UKIBC Member Ernst & Young India said: "A big welcome and one of boldest steps. I hope this will be reflective of new era of reforms and re-instill investor confidence in India."
Global retailers will now definitely get back to their drawing boards to explore India plans, he said, adding that Indian retailers looking for expansion and fund raising will look forward to studying the fine print.
UKIBC is a business-led organisation promoting bilateral trade and investment between the two countries, whose mission is described as facilitating an increase in trade between the UK and India through business to business dialogue.
First Published: Friday, September 14, 2012, 21:39