Toronto: The Canada-India Business Council (C-IBC) sees the recent changes in Indian retail law for foreign companies, as an important development that can benefit companies wanting to expand into India.
India will begin allowing 100 percent ownership for foreign single brand companies in India from the previous 51 percent, which are expected to give a big boost to major brands such as Ikea and Starbucks (which is rumoured to be opening its first café in Mumbai next month, after signing an MOU with Tata Coffee Ltd.). Major companies like Ikea and Starbucks will put a spotlight on India and attract more large Canadian Companies.
Rana Sarkar, President & CEO, Canada-India Business Council points out, “This reform, which requires the use of a smaller Indian Company for at least 30 % procurement, has already shown positive economic potential in India. Pantaloon, one of India’s largest retailers’ stocks soar 10 percent after the announcement was made. The hope is this reform will allow liberalization in the Indian market and potentially revolutionize Indian supply chains and lower consumer prices.”
Sarkar believes that this policy change may even change the political climate and make it easier for India to pass a reform on multi-brand retail allow companies such as Wal-Mart, and Carrefour to enter the Indian market. “I also see a real opportunity for the establishment of a cold supply chain in India; for example, one Canadian Company that has seen enormous success in the Indian market through their potato production, is McCain Foods. With an established cold supply chain, other food product companies will be able to grow their brand and surpass their original intent in India.”
India has a 400 billion dollar retail market which has a huge potential for Canadian Companies. With the ongoing CEPA agreement between Canada and India, this reform will encourage more Canadian brands such as clothing retailers; Joe Fresh, Lululemon and Aritzia, to invest and expand their business into India.
Sarkar is aware of all the political football that is being played in India over the issue. But he is optimistic of the long term outcome. He explains, “Although there has been ongoing political turmoil in this area, the direction of travel is certain, a retail revolution is going to happen in India, which will forever change and improve the India economy.”