| Carrefour might apply if Tesco passes muster |
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New Delhi/ Mumbai, 19 December French group Carrefour, second largest retailer in the world after Walmart, is getting ready to open stores in India, it is learnt. The company is engaged in talks with potential partners, including Kishore Biyani's Future group, with which it was close to inking a deal a little more than two years earlier, a source said. Another person in the know said Carrefour had recently held discussion with the K Raheja Corp- owned Hypercity, a subsidiary of Shoppers Stop Ltd, for a possible alliance. In multi- brand retailing, a foreign chain cannot hold more than 51 per cent stake. Currently, Carrefour operates five cash and carry or wholesale outlets in India. This is a category where up to 100 per cent foreign investment is allowed. Carrefour is likely to move forward with an application to invest in multibrand retail stores in India, depending on how the government responds to the application of UK- based Tesco. Earlier this week, Tesco sent a proposal to the government to invest $ 110 million in Tata Group's Trent and run multi- brand stores in Karnataka and Maharashtra. The Foreign Investment Promotion Board might take up the Tesco- Trent proposal by the end of this month. Responding to a Business Standard questionnaire on whether the French chain was preparing to file an application for multi- brand retailing in India and if it was partnering the Future group, the largest retailer of the country by revenue, a Carrefour spokesperson said, " At this point of time, we will not be able to comment on anything." A Future group spokesperson said, "We don't comment on market speculation." When asked, Kishore Biyani said, " Nothing is happening." Shoppers Stop managing director Govind Shirkhande declined to comment. The fact that Tesco is applying to invest in existing Trent facilities has triggered a debate on whether the application is in compliance with the government norms, which talk of investment in new ventures. Trent has said the group is in compliance with the FDI norms. Many Indian retailers are keen on foreign investment but the policy rider issued earlier this year, that the mandatory $ 100 million investment must only fund new ventures, is being seen as a hurdle. Domestic retailers are awaiting a further clarification from the government on investment in expansion of existing facilities. Meanwhile, some senior officials of the € 76- billion Carrefour are expected to arrive soon from France, adding to the buzz that the chain has big plans on India. Although the group had shut many stores across the world and exited some places, such as Malaysia, Singapore, Indonesia and Greece due to the economic slowdown or poor business, it recently made news for buying a portfolio of 127 shopping malls in France, Spain and Italy from real estate group Klepierre for € 2 billion. The company is focused on Europe and key Asian markets asuch as China. At annual revenue of ₹ 190 crore in India as of December 2012, Carrefour has gone slow herein its cash- and- carry entry. It started its first India store in December 2010 and opened the fifth one in Bangalore this Wednesday. French giant might apply for multi- brand retailing if UK rival gets nod Small traders oppose Tesco- Tata venture Small traders, against the Union government's decision to allow foreign direct investment ( FDI) in multi- brand retail, want the Centre to strike down Tesco's proposal to take a stake in Tata's Trent hypermarkets. " It is a blow to small traders in the country because if multi- brand retailers are allowed, they will adopt predatory pricing and kill the trade. They will create monopoly at a certain point of time," said Praveen Khandelwal, secretary general, Confederation of All India Traders ( CAIT), a trade body representing 20,000 trade associations. Khandelwal said CAIT has called for a core committee meeting on December 28. " Traders across the country will oppose any political party supporting multinational retailers in the country," he added. Mohan Gurnani, president of Federations of Associations of Maharashtra, said, " We have been trading for many years. We do not need any assistance from abroad to run our business. In fact, Tatas are capable of running their retail business alone. Why do they need partnership?" However, big retail chains have welcomed the TataTesco retail joint venture. Mohit Kampani, chief executive of Spencer's Retail, said: " FDI in the sector is welcome. This sector needs equity investments and can't rely on debt for long. Investments from foreign chains is a welcome step as food and grocery retail requires a long- term view of the business." BS REPORTER |
| Favourable GST needed to tame food inflation: Icrier study |
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New Delhi, 19 December If the inflation in food products is to be brought under control, we need a robust food processing sector, for which a favourable tax regime is crucial, according to a report. Issued on Thursday by the Indian Council for Research on International Economic Relations ( Icrier), it has said allowing foreign direct investment (FDI) in multi- brand retailing will not suffice to fight surging prices. Much will depend, it has said, on how the food processing sector is treated under the proposed Goods and Services Tax ( GST) regime and whether there will be a single GST. The report has a survey to buttress this point. " The findings countered some of the popular beliefs in this regard," it has said. Wholesale Price Index- based food inflation reached almost 20 per cent in November, compared to a little over 18 per cent in the previous two months. The report said what could bring down inflation was to ensure the food processing sector faced uniformly low tax and other fiscal and regulatory barriers were removed. FDI in multi- brand retailing is, however, seen as a help by 95 per cent of the respondents in the survey. They felt it would provide them a wider choice of products and brands, beside helping to get better deals and discounts on products. At the issue of the report, Union Agriculture Minister Sharad Pawar said much the same thing, that GST implementation would benefit the food processing sector, struggling with myriad tax structures. The aim of GST is to remove barriers to movement of goods and services across states. However, it is not likely to come into effect in the life of this Lok Sabha; the Empowered Committee of State Finance Ministers recently rejected the Centre's proposal to bring alcohol and petroleum products under it. The Icrier report's focus was on non- alcoholic beverages. It said this sector accounted for almost one per cent of India's gross domestic product and was expected to grow by double- digits annually in the next 10 years, better than other manufacturing sectors. Criticising the current structure of providing subsidies to develop cold chains and like facilities, the report said in most cases these subsidies did not benefit the industry much. The gains were eroded further by a multi- layered tax structure and the high cost of doing business. "It is often argued that bottled water is a luxury commodity and, therefore, it faces high and differential taxes… in a country like India where it is difficult to get clean drinking water, such steps are anti- poor," the report said. It suggested India learn from the experience of countries such as the UK, Canada and Australia. These have used low taxes to streamline the agro- supply chain. The report said India's ability to emerge as a manufacturing hub for non- alcoholic beverages was inhibited by poor infrastructure such as power shortages and inconsistent supply of raw materials, and high duties on intermediate products, especially packaging material. Unless reforms were initiated at a rapid pace in this sector, Indian companies will relocate elsewhere and use the free trade agreement route to cater to the domestic market, the report added. Carbonated soft drinks 355 Fruit- based juices 250 Milk & yogurt- based beverages 228 Vegetables/ fruit concentrates/ fruit powder or syrup 137 Bottled water 136 Vegetable Juices 94 Tea- based drinks 79 Coffee- based drinks 45 Other 45 Source: Icrier report on food processing industry in India FOOD FOR THOUGHT Avg monthly expenditure on non- alcoholic beverages (₹) |
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