India's retail outlook a bit cloudy now: Deloitte

The retail outlook for India in the short term is a bit cloudy due to the recent developments on the policy front, according to a report by Deloitte Touche Tohmatsu Limited and Stores Media. In the long term, FDI in multi-brand retail would have a positive impact on economic growth of India, and it would benefit the world’s leading retailers “as they continue to seek global opportunities beyond the Chinese market”, the report said.

Elaborating on the government rollback of the “planned liberalisation” in retail, it said, “It is not clear whether this proposal will be offered again.” In November, the Union Cabinet had decided to allow 51 per cent FDI in multi-brand retail, but later kept the decision on abeyance due to political pressure.

Despite slowing growth and persistent inflation, India is relatively immune to the problems in the global economy. The report explains that “trade is a modest share of GDP”and “India’s financial sector is not highly exposed to the troubles in European credit markets”.

In the long term, India’s prospects are good, according to Deloitte’s global report, which has ranked the top 250 retailers around the world according to their revenue. Walmart continues to be the largest retail chain in the world.

While stating that the country has a youthful population, the report argues that India has its share of obstacles. “These include a high degree of trade protection, continuing regulation of labour markets and uncertainty regarding the future of policy.”