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By Euromonitor International The time is right for international retailers to invest in 'Cash and Carry' stores in India, according to retail analysts at Euromonitor International. The 'Cash and Carry' wholesale market offers international players both the chance to enter the dynamic Indian retailing market and a way round the country's regulations against foreign retailers opening single stores in India. By investing in the wholesale market now, international grocery retailers can also secure a foothold in the Indian retailing market prior to its deregulation. Legislation loopholes provide the key to growth While strict legislation currently prevents foreign retailers from opening single brand stores in India, there are no restrictions on foreign direct investment into the wholesale market. International retailers are therefore free to set up 'Cash and Carry' stores throughout the country, providing them with a golden opportunity to make in-roads into India. When the restrictions on the retail industry are lifted, international retailers will be in a prime position to easily convert their 'Cash and Carry' stores into highly profitable supermarkets and hypermarkets. While strict legislation currently prevents foreign retailers from opening single brand stores in India, there are no restrictions on foreign direct investment into the wholesale market. International retailers are therefore free to set up 'Cash and Carry' stores throughout the country, providing them with a golden opportunity to make in-roads into India. When the restrictions on the retail industry are lifted, international retailers will be in a prime position to easily convert their 'Cash and Carry' stores into highly profitable supermarkets and hypermarkets. An opportunity too good to miss Euromonitor International forecasts that the retail market in India will grow by 28% between 2006 and 2010, with sales currently worth US$80billion growing to US$103billion. A number of foreign investors have identified this opportunity already and are operating through franchises or wholesale trading. Metro for example, the German cash and carry retailer, entered the Indian market in 2003 and has already proven that gaining market share is viable, and is currently expanding its business. Pressure mounts for deregulation There is increasing diplomatic pressure on India from foreign leaders to deregulate its retail sector. UK Prime Minister Tony Blair lobbied on behalf of supermarkets during the first high-level UK - Indian investment summit in London. Indian Prime Minister Singh was called on to relax the laws which currently prevent British retailers from operating in India. The legislation looks set to be lifted as international pressures, along with internal demands from Indian businesses, continue to rise. Indian firms welcome the competition A number of Indian companies have also signalled they are in favour of deregulation of the retail sector. Reliance Industries for example, is keen to see foreign competitors, such as Tesco, Wal-Mart and Carrefour operating in the Indian market. The chairman, Mukesh Ambani, believes they would “contribute to this economy hugely and keep local companies on their toes. We should welcome Tesco because it's good for competition, and that's good for Reliance”. Ambani also commented, “Every company has a home market and a foreign market. We're in India, so we don't need any (help from) regulation to get a head start. Tesco would add value to India.” For further detail about this article and other related findings, please visit Euromonitor International by clicking here.
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