With the government still not decided about allowing foreign direct investment (FDI) in multi-brand retail, Future Group founder and chief executive officer Kishore Biyani has said its implementation will be a welcome step, as it would provide much-needed capital.
"Modern retail is very expensive business. You have to build up the entire distribution, you have to build up the entire supply chain, you have to build retail stores. Today for us the access to capital to build our business is a scarcity. You need capital. We need capital in some form or the other. If FDI comes in, then it is a welcome step. You will drive consumption and ultimately consumption will drive growth," he said here.
"FDI is a subject that we talk about too much in this country. India is the only country where we use the word multi-brand retail. Nowhere in the world we understand this terminology. If there are challenges in opening up super market or food sector in retail, there are other sectors which can be opened up. Ultimately, India never had that kind of capital to grow or change an ecosystem," he elaborated.
The central government had last year allowed 51 per cent FDI in multi-brand retail, but the same could not be implemented in the face of strong opposition from UPA allies including Trinamool Congress, and several state governments.
Biyani further said that the Goods and Services Tax (GST), when implemented, will also be a major game changer for the industry.
Today small retailers have bigger advantage as the tax they pay is different.
"I think GST can be a game changer for us as a physical retailer also. It is a big game changer," he said.
On the e-commerce industry in the country, Biyani said, "E-commerce is doing well in the US because it is a very consumption-driven economy. We are learning to consume value-added products in this country. There are challenges in e-commerce like cost of delivery, cost of technology, among others. We are still 3-4 years away from this business taking off in a significant and profitable manner."
"I think for e-commerce to supply to 15,000 pin codes, we need to create infrastructure, products and demand. We are making efforts, but the major products which are selling are low-margin ones, in which you can't get money like electronics or mobile phones. We need to get more value-added products, where there is enough margin so that you can sustain the delivery cost," he added.
Biyani, who is credited for changing the face of the Indian retail sector, admitted he has made mistakes in his ventures and added that new entrepreneurs need mentors to guide them in not committing those mistakes.
"Entrepreneurs need mentors who can help them, who can tell them what you should not do rather than telling them what to do. Being an entrepreneur myself, I know I have made all the mistakes...We have created many entrepreneurs (through future venture). My attempt with future ventures didn't do well. My public issue didn't do well. My shares are still languishing. The companies in which I invested are doing fantastic," he said.
FDI in Retail Will Be a Welcome Step: Kishore Biyani
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