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Foreign multibrand retailers will take at least two to three years to enter the Indian market due to some of the tough riders stipulated by the government. The riders relate to a mandatory approval of state governments and investment in back-end infrastructure, a CRISIL research report said. CRISIL said mandatory approval by the state, where the foreign retailers would like to set up shop, will give it power to impose additional conditions. More, there will always be uncertainty if the state government changes. “The government is yet to clarify on whether the mandatory investment of 50 per cent in back-end infrastructure would need be on a cumulative investment basis or a minimum investment,” CRISIL said.
Adding that mandatory investment in fresh back-end and front-end will lead to a wastage of time as retailers will take at least two to three years to finalise the location of the store.
The policy stipulates that at least 50 per cent of the foreign investment, excluding land costs, should be made in back-end infrastructure within a period of three years from the first tranche of investment. The investment in back-end can be made across the country, irrespective of the fact whether or not that state allows FDI in multibrand retail.
