'Restrict flight of domestic capital to curb FDIs in retail'

New Delhi, June 3 (UNI) To prepare the Indian retailers to compete with global retail biggies like Wal-Mart and the like, an industry body has suggested opening the retail sector to FDIs in a calibrated manner to restrict flight of domestic capital.

This will give enough breathing period to retailers in the country, that will have a proportionate share in the organised retail sector expected to touch 23 billion dollars from the current size of 7.5-8 billion dollars by 2010, Assocham said.

At present, up to 49 per cent Foreign Direct Investments (FDIs) are allowed in retail.

Organised retail still occupies about 50 million square feet of quality retail space in the organised sector, the space requirement of which could well exceed beyond 150 million square feet by 2012 in the country.

''The domestic players suffer from lack of infrastructure, the biggest bottleneck being the prohibitive prices of large retail spaces in the upmarket or central locations in metros,''said Assocham President Venugopal N Dhoot.

The reason for high prices is the fragmentation of private holdings and the impact of the Urban Land Ceiling Act. The pro-tenancy Rent Control Acts have distorted the property markets in the cities leading to exceptionally high prices.

A plethora of bureaucratic hurdles and high capital cost also place the domestic retailing firms at a disadvantage against the international players who have over the years placed efficient chains in order at a low capital cost, added Mr Dhoot.

It is estimated that for opening a single store in the country as many as 13 licences are required.

''Absence of single window clearance, coupled with other issues like lack of property infrastructure, work as a major impediment to the growth of the retailing,'' the Assocham President said.

The global retail giants are drawing up their expansion plans in India and looking for opening up of foreign investment in the sector. ''A revolution in the Indian retail sector is already underway and with the help of the right policy and changes, it can bloom further and benefit consumers greatly.'' A major driver for real estate and urban development, retail is the biggest private sector industry in the world and a prime mover of an economy. It accounts for almost 10 per cent of the Gross Domestic Product in most countries.

The sector is also a major employer in most economies, up to 16 per cent in the US, 15 per cent in Brazil and 12 per cent in Poland.

Though the retail industry is expected to create over two million jobs by 2010, shortage of professionals would remain a big challenge.

To overcome this, retail management programmes and institutes should be set up that can train talented professionals to meet the requirement of manpower, Assocham suggested.

India employs roughly about 40 million people in its real estate and retail sector directly while for indirect employment, there are multiple estimates.

UNI