As we begin the New Year, there is so much to be thankful about with regards to retail trade in the country — the introduction of GST, its many revisions, the MDR subsidy, blanket permission for shops and establishments in Maharashtra to operate 24/7 — are just a few of them. The demonetisation has brought in a lot more people into the formal economy, the GST has helped people relook at the businesses from a transportation point rather than a taxation point, the demand has been up – all good news for retail.

In addition to a favourable policy environment, one other thing that is working in favour of retail is the right consumption atmosphere in the country. As per recent media reports, India’s per capita income, which is a measure of the country’s living standard, is estimated to cross Rs. 1 lakh in 2016-17, up from Rs. 93,293 in the previous fiscal. When there is more money in the hands of people, it always bodes well for retail businesses as there is an increase in consumer spending. If consumption in India increases, it re-emphasises ‘the democratic dividend that India has’ (as the prime minister likes to put it) and this will further support the ‘Make in India’ movement in the country.

India has done a whole lot of things to increase optimism and opportunity with regard to retail. Now, what one needs is to ensure that its potential is capitalised. Modern retail needs to grow from the current level of 8 – 10 per cent  to 22 per cent in the next four years. This cannot be done without relooking at the Foreign Direct Invest­ment (FDI) policy in this country. So far, FDI in retail has been put together in bits and pieces — initially by classifying into single brand and multi-brand, then opening the doors on each side, little by little. At the start, single brand entities were allowed access to foreign funds with caveats and permissions, while today they have been given 100 per cent access through the automatic route with liberalised sourcing norms.

However, most retail in this country is still about multi-brand retail and reforms on that front will lead to a huge boost to Indian retail. Allowing such Indian-owned, Indian-managed retailers access to global capital will help improve their competitiveness.

Hence, the need of the hour is to allow all retailers 49 per cent access to FDI through the automatic route, and not just concentrate on brands coming from abroad. While foreign brands coming into India do create a new set of benchmarks for retail and give consumers a much wider choice, there is definitely a need for Indian retailers to be in a position to create benchmarks, which are globally competitive. It is therefore necessary, to allow Indian owned, Indian managed retail brands access to funds from across the globe by opening up FDI to them. It will not only bring down their cost of capital, but also help open up a world of opportunities for them.

The Writer is  CEO, Retailers Association  of India