Indian government’s decision to allow more retail FDI (Foreign Direct Investment) was passed in the Lok Sabha. New retail FDI bill gives some rays of hope to troubling mall owners.
The approval of more Foreign Direct Investment (FDI) in retail policy by the Lok Sabha (LS) fills some hopes to the mall owners. They expect to reduce the vacant space as the foreigners will have permission to run shops in India.
With the shopping-mall development boom there has been excess of retail space in all major cities of India. This was comparatively higher in New Delhi and Mumbai. The situation left the mall owners to struggle with the excess of retail space which remain vacant.
Prior to the present FDI bill, India had allowed foreign companies to own up to 51% of stores which sell multi- products like clothes, electronics and other home products. 100% foreign ownership was granted to single-brand companies. This enabled the foreign companies to open up their outlets in India. Before this the foreign companies had to find a local partner who is ready to own nearly 49%.
Mumbai based real estate firm Phoenix Mills Ltd.’s manager Mr. Rajendra Kalkar expressed that new retail FDI plan will boost their business. Phoenix Mills Ltd. operates four such malls in Mumbai. He rated the government’s new retail FDI plan as ‘very good.’
There was a similar voice from the spokesperson of Emaar MGF Land Ltd. The Delhi based real-estate firm runs seven shopping malls across India. He opined that the new retail FDI plan will revive the sluggish real estate business.
Real estate consultant Knight Frank India Pvt.’s retail division head Mr. Gulam Zia is of the opinion that only the shopping malls in the metropolitan will be supported by the new retail FDI plan. He added that it will remain incapable of filling the vacant spaces in those shopping malls in the inferior locations. There will be no taker for such malls.
The queue of foreign retailers is becoming longer and longer. U.K.-based Footwear Company Pavers England won government approval to set up wholly owned stores in India in October. It is the first foreign firm to win government approval. Swedish- originated furniture retailer IKEA too got government – approval in November.
Reports say that U.S.-based Fossil Inc. has also applied for the government – approval. The firm produces multi products like watches, clothing and jewelry items. “We expect to start our shops up by 2013 in India,” reveals Fossil India Pvt.’s M.D. Vasant Nangia.
Real estate analysts say many malls fail because they lack the necessary things. It is pointed out that the shopping malls should provide good food. The presence of multiplex is highly advisable. Only such facilities will keep the visitors coming back. In such cases retail FDI bill becomes futile. Real-estate consultant firm DTZ India’s CEO Mr. Anshul Jain said these are what attract the customers to shopping malls.
In October, Starbucks opened its first Indian store in Mumbai. It was in collaborated venture with India’s Tata Group. Officials of Starbucks said that they are planning to set up more stores across India.
They added that setting up more stores across India will be part of their expansion- strategy. However such good news always fills some more hopes to the retailers. Yet one thing is sure that one has to wait longer to experience the impact of new retail FDI policy of the government.