Home / Knowledge / News / Apparel/Garments / First FDI backed multi brand store may take 15-18 months
First FDI backed multi brand store may take 15-18 months
Oct '12
Despite the Indian government announcing up to 51 percent FDI stake in multi-brand retail to foreign retailers, it would take up to 15-18 months before the first store takes shape, say experts. The Reserve Bank of India also notified the decision on September 22.

Even Mr Scott Price - CEO and President of Walmart Asia in an interview to The Wall Street Journal admitted that it is looking to open its first outlet in India in 12-18 months. This despite that it already operates a wholesale joint venture in India with Bharti Enterprises Pvt. Ltd.

The common thread running through each of the experts, fibre2fashion spoke to say - setting up a store takes a long time as each retailers needs to have a solid backend, train employees, tie-up with suppliers as well as the time consuming process of getting licenses from various authorities also needs to be factored in.

“Only 9 states in India have given consent to FDI in retail which are spread out across the whole country for which they would need to have a good structure”, reveals Rachna Nath – Leader (Retail & Consumer) at PriceWaterhouseCoopers India.

She adds, “Again 50 percent of the investment needs to go in to backend, which cannot be land or rental. So they will have to set up warehouses, production units, logistics, etc. Merchandising and sourcing also has to be right. Even for FMCG products, the fulfillment rate for a retailer is just around 70-75 percent”.

“Getting various licenses from the central, state and local governments is also time consuming. Considering the time consumed in each of these processes, it can be safely assumed that the first store can be made operational only in 15-18 months”, she explained.

Mohit Bahl – Partner at consulting firm - KPMG (Transaction Services) is of the opinion that operating models need to be set-up, aligned to the supply chain in the specific states which will allow retail FDI.  He cites an example of the Indian partner operating a pan-India network while the joint venture with the foreign retailer can operate only in 9 states.

“Having two separate supply chain streams can only bring inefficiencies, he says.  “Working out sourcing and establishing a network of suppliers from the small scale sector to comply with the 30% sourcing norm is a big challenge. Alongside operating structures for joint ventures needs to be formulated and clarity is needed around how the state permissions will work”, he informs.

Siddharth Bafna, Partner at Lodha & Co says, “Setting up of say a retail outlet just of 25,000-40,000 sq feet involves finding employees, providing them training, tying up with suppliers and a host of other issues and takes between 6-8 months. Considering the size of stores the global retailers will set up, the first FDI backed multi-brand store may take atleast 15 months”.

On the crucial question of a rollback of the FDI policy if a new political entity comes to power in the near future, Rachna avers that it would not be an easy decision for any party that comes to power. “On one hand the government says it needs one billion dollars investment in infrastructure of which 50 percent has to come from the private sector. Under the circumstances, no government can afford to scare away foreign investments”, she opines.

Must ReadView All

Courtesy: Fancycrave.com from Pexels

Apparel/Garments | On 22nd Jun 2018

EU's retaliatory duty on US apparel takes effect

As part of the three-pronged response outlined by the European...

NCC applauds House passage of farm legislation

Textiles | On 22nd Jun 2018

NCC applauds House passage of farm legislation

The National Cotton Council (NCC) of the US has welcomed the passage...

Courtesy: Roman Pohorecki from Pexels

Apparel/Garments | On 22nd Jun 2018

UK launches inquiry on sustainability of fashion industry

The Environmental Audit Committee of the UK Parliament has launched...

Interviews View All

Amrit Sethia

‘The intimatewear category in India is slowly becoming trend-sensitive.’

Saket Garg
Garg Corporation

The biggest challenge is lack of skilled workforce and competition from...

Top executives
Textile & apparel bodies

The decision to reduce GST on MMF yarn to 12% is transformational

John Kelley

Textile Events is one of the largest textile fair in the United Kingdom,...

Tom Adeyoola

Describing itself as the best body shape and garment fit company in the...

Rikesh Mistry

Jupiter Comtex Pvt Ltd, established in 1973, started its textile machinery ...

Kevin Nelson

Kevin Nelson, Chief Scientific Officer, TissueGen discusses the growing...

Urs Stalder
Sanitized AG

Urs Stalder, CEO, Sanitized AG, talks about the increasing use of hygiene...

Marcel Alberts

Coating at a fibre level is a practice not usually seen in the...

Bani Batra

Bani Batra’s couture wedding collection is inspired by traditional Indian...

Akta Adani
India Boulevard

India Boulevard is a San Francisco-based curated fashion marketplace that...

Wendell Rodricks
Wendell Rodricks

"We should not compare India and the West. There are things we do that...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


Letter To Editor

(Max. 8000 char.)

Search Companies


Leave your Comments

June 2018

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category

Related Categories:

Advanced Search