FDI in August dips 38% to $1.4 billion, lowest in last 8 months

Foreign direct investment (FDI) into India declined to 8-month low of USD 1.4 billion in August, down 38 per cent year-on-year.

FDI had touched a low of USD 1.10 billion in December last year.

In August 2012, the country had attracted foreign investment worth USD 2.26 billion.


During the April-August period of 2013-14 fiscal, FDI has grown by a meagre 4 per cent to USD 8.46 billion, from USD 8.16 billion in the first five months of 2012-13, a senior official in the Department of Industrial Policy and Promotion (DIPP) said.

According to industry experts there is a need to improve business environment in the country.

"There is a need to further improve the business environment. Reforms in the recent past are welcome, but more needs to be done in order to build foreign investors confidence," Head of tax and expert on FDI with corporate law firm Amarchand & Mangaldas Krishan Malhotra said.

The sectors that helped in registering the hike during the five months include services (USD 1.19 billion), pharma (USD 1.07 billion), automobile (USD 661 million) and construction (USD 592 million).

The maximum FDI during the period came from Singapore (USD 2.37 billion), followed by Mauritius (USD 2.13 billion), the Netherlands (USD 980 million), Germany (USD 529 million), and the US (USD 475 million).

The DIPP official said the recent steps announced by the government will help improve the investment climate in the country and push up FDI inflows.

"The government has also started exercise in allowing FDI in railways sector besides liberalising FDI norms for construction and housing sector. The aim is to boost FDI inflows," the official added.

It has already relaxed FDI policy in 12 sectors, including telecom, tea and petroleum & natural gas.

FDI inflows in 2012-13 aggregated USD 22.42 billion, a decline from USD 36.50 billion in 2011-12.

India is projected to require around USD 1 trillion between 2012-13 and 2016-17, the 12th Five-Year-Plan period, to fund infrastructure growth covering sectors such as ports, airports and highways.

A decline in FDI would hurt the rupee, which had depreciated to a record low of 68.85 against the US dollar on August 28. It has strengthened since then to about 61 level.

More: http://timesofindia.indiatimes.com/business/india-business/FDI-in-August-dips-38-to-1-4-billion-lowest-in-last-8-months/articleshow/24773445.cms

Tesco awaits clarity on India’s retail FDI norms

UK's leading retailer Tesco is awaiting clarity on India's policy on FDI in multi-brand retail before drawing up its plans for the country.

World's largest retailer Walmart on Wednesday split its six-year old partnership with Bharti Enterprises, apparently unable to comply with the FDI norms for multi-brand.

A Tesco spokesperson said, "We are excited about the India opportunity and await policy clarity before we can take further decisions on the matter". The company, which has a partnership with Tata group firm Trent, did not elaborate on the type of clarity it has sought from the government.

Credits: financialexpress

After Bharti, Walmart in no hurry to get into retailing; cash-and-carry stores remain winning formula

Wal-Mart Stores, after its break-up with Bharti Enterprises, does not have any immediate plan to get into retailing in the country, making India the only market where the world's largest retailer will limit itself to the wholesale space. Why?

Walmart officials in India say the company has found a winning formula in the Best Price Modern Wholesale chain. They even say that the Bentonville, Arkansas-based giant is so bullish on the format that it plans to export the formula to other emerging countries in Africaand Asia.

Analysts say focusing on the 20 Best Price cash-and-carry stores is the best option for the US giant as the business has proved lucrative and finding partners for retail entry will take time.

"The current regulations mean Walmart would need an Indian partner to set up retail operations and, keeping in mind their discussions with other major Indian players, that would take a while. So, going ahead with the 20 stores they have for the cash-and-carry model seems to be the most logical thing to do," Devangshu Dutta, chief executive at retail consultancy firm Third Eyesight, said.

"This will help them attain a critical mass in India in setting up a retail business, if they wish to, in future. It will also help them achieve a comfort level in working in the Indian environment," he said.

Walmart got into wholesale business in India by default, because that was the only space foreign retailers were allowed to operate in when it entered the country. India allowed FDI in multi-brand retail space only last year.

But, thanks to several tough riders, big supermarket chains such as Walmart and Carrefour have yet to enter the space despite the government making the norms easier since.

The cash-and-carry business, in comparison, comes without any restriction on foreign investment, and offers huge growth potential. Industry officials estimate it will be a $22-billion (about Rs 1,36,000 crore) business in India by 2017 and the market leader can eye revenues of about $5 billion (about Rs 31,000 crore) then.

Sam Walton, the founder of Walmart, launched Sam's Club wholesale chain 30 yeas ago. Today, there are 700 membership-based Sam's Club. In the US, they can sell to all bulk customers, including consumers.

However, regulations in India do not permit cash-and-carry to sell products directly to consumers and such venture must restrict business to retailers and businesses.

Yet, the business has proved highly lucrative with thousands of mom-and-pop storeowners in the country finding cashand-carry outlets more convenient than local wholesale markets.

Reliance Retail is also bullish in this space and plans to roll out dozens of wholesale outlets. Also, by going solo, Walmart can ensure it complies with anti-bribery norms of the US government.

Bharti Walmart has not opened any store for a year and dismissed some officials because of an internal probe to check if the India unit has violated the US Foreign Corrupt Practices Act, which prohibits American firms from bribing government officials in foreign countries.

In a joint statement announcing the break-up on Wednesday, Walmart Asia head Scott Price said, "We will continue to make important social and environment contributions to India, seeking conditions that will boost retail FDI in India."

Credits: economictimes