India ranks second in retail potential

BusinessIndia jumped 13 positions and was placed second in retail potential in the 2016 Global Retail Development Index (GRDI), released by AT Kearney, a Chicago-based consultancy. The country was ranked 15 in the previous year. The report profiled 30 developing countries.

India’s high ranking is driven by GDP (gross domestic product) growth, improved ease of doing business, and better clarity regarding FDI (foreign direct investment) regulations. India is now the world’s fastest-growing major economy, overtaking China, and retail demand is being fueled by urbanisation, an expanding middle class, and more women entering the workforce,” said Mike Moriarty,

AT Kearney partner and co-author of the study. India’s retail sector has expanded at a compound annual growth rate of 8.8 per cent between 2013 and 2015, according to the report.

Analysts, however, did not agree that FDI was a key driver of retail growth in the country. They even questioned if India had made it easy to do business. They argued that while investment was allowed by the government into multi-brand retail stores, the riders put in place made it almost impossible for money to truly flow into the country.

India ranks second in retail potential “Most of the growth we see is driven by domestic funding. Look around, there is Aditya Birla Group or Reliance or Future, which are the biggest players in the market,” said Arvind Singhal, chairman and managing director of Technopak.

He said FDI was allowed in single brand retail stores and despite the likes of Zara and H&M, along with some other luxury brands, opening shop in India, their contributions are minimum.

India’s growth story still comes from independent and unorganised retail markets,” he said. Singhal argued that India’s retail market was $550 billion, in which $380 billion came from food and groceries and $45 billion from fashion.

Of the $380 billion in grocery, very little is from organised stores. Most fresh produce is still sold in the markets,” he said.

This is, however, set to change.

The government has allowed 100 per cent FDI in food retail and we believe that those kind of stores will be profitable,” said Debashish Mukherjee, a partner and co-head of consumer industries and retail products practice for India and Southeast Asia, A T Kearney.

He said despite the riders, multi-brand stores will find traction in India. “These are business experience problems and once that is seen through you will see the market mature,” said Mukherjee.

The report admitted that infrastructure bottlenecks and state-level power dynamics still remained big concerns. The cash-and-carry segment was doing brisk business, the report said, where existing players such as Walmart and Metro planning to expand their base and targeting 70 and 50 stores, respectively, by 2020.

E-commerce was once again a big driver for retail growth in India, with several foreign brands using the likes of Jabong and Amazon to make their entry into the country. But, here too, FDI that did poured into the country was used for funding operational losses and providing discounts. Alibaba’s decision to enter the Indian market also influenced the ranking. Mukherjee said even if there were some barriers put in place they defined what the market would be. “This clarity has helped India get investments,” he said.

Analysts believe retail spending and corresponding investments are set to grow. “A strong monsoon will kickstart rural spend and you should see strong growth numbers in the October quarter,” said Singhal.

India’s rank was further amplified by the collapse of the South American and Russian economies.

We also took Mexico and Chile out of the list because we believe that they have becomes developed economies in the retail perspective,” said Mukherjee.

Source

Apple CEO Tim Cook says betting big on India

NEW YORK: Apple sees a “huge market potential” for its products in India and the technology giant is “really putting energy” in the country which will begin rolling out high-speed wireless networks this year, CEO Tim Cook said.
This is another huge one. India will be the most populous country in the world in 2022. India today has about 50% of their poptim_cook_ceo Appleulation at 25 years of age or younger. It’s a very young country. People really want smartphones there,” Cook said in a CNBC interview.
He said in emerging markets like India, LTE (wireless) penetration is currently “zero” but as LTE begins to roll out this year in the country, the dynamics will change.
And so that’s changing. Huge market potential,” he said in response to a question about the Indian market for Apple.
Cook said the company has got “great innovation” in the pipeline and new iPhones that will attract people in markets like India.
Cook said in countries like India, Apple penetration has been less since there is no LTE networks.
What I see is that countries like India, no LTE, so 0% penetration. They are selling smartphones, and we sell iPhone there. But arguably you can’t get the full value from it,” he said adding that retailers in markets like India are not “huge national kind of retailers.”
And the carriers don’t sell phones in India. So there’s a lot of work to do,” he said.
While sales for Apple in China, its second-largest market after the United States, fell 11% in the latest quarter, in India iPhone sales were up 56% from a year ago.
Noting the growth registered by Apple in India, Cook said “this is pretty big.”
He said Apple is “now…really putting energy in India” as well as in other markets across the world “where I think that people sitting here in this country look at it through just a lens of what’s happening in the United States. And but there are a lot of people in the world who don’t have the pleasure of owning an iPhone yet.

India ranks 130 in ease of doing business, jumps 12 places: World Bank report

world-bankChina is ranked 84 and Pakistan is at 138th place. Pakistan in fact has slipped 10 spots from 128 last year while China has moved six spots in a year from 90 since the last report.

It may have become easier for Indian businesses to start a business, but their access to credit and ease of paying taxes has worsened, according to the World Bank’s Doing Business Report 2016. India now ranks 130 out of 189 countries in the ease of doing business, moving up four places from last year’s adjusted ranking of 134.
The rankings for both the years are part of a revised methodology adopted by the bank. India improved its position on three counts—starting a business, getting construction permits and accessing electricity—in the latest edition of the Ease of Doing Business Index, but saw its performance worsen with regard to two parameters—accessing credit and paying taxes.
In the areas that India’s performance has improved, the biggest improvement was under the head of ease of ‘access to electricity’, where it moved up 29 spots to 70.
Here, though, the assessment in the study that focused on the challenges faced by a business house in obtaining a permanent electricity connection for a newly constructed warehouse, was limited to the city of Mumbai, which has the best electricity distribution utilities operting in the country.
Another cause of concern was that the ‘getting credit’ ranking has slipped from 36 to 42, implying that it has become much more difficult to get credit in India despite the government’s efforts at financial inclusion and pushing ease of credit delivery.
It also slipped one spot in the criteria of ease of paying taxes.
India moved up nine spots in the criteria of starting a business to 155 in 2016 from 164 last year and its ranking for dealing with construction permits also moved up one spot to 183. In other segments such as protecting minority investors, registering property, trading across borders, enforcing contracts and resolving insolvency, India’s rankings remained the same as last year.
However, in the area of protecting minority interests of shareholders, India is ranked at eight, its best ranking across all parameters.
The NDA government has announced its plans to resolve insolvency issues and enforcing contracts through legislations such as the bankruptcy law and public contracts dispute resolution bill— areas where it is languishing in the overall Ease of Doing Business rankings.
India is ranked 178 in the parameter of enforcing contracts and 136 on the parameter of resolving insolvency.
In the past year, India eliminated the paid-in minimum capital requirement and streamlined the process for starting a business. More reforms are ongoing—in starting a business and other areas measured by Doing Business—though the full effects are yet to be felt,” the World Bank has said.