"One could definitely see more and more alliances happening going forward and why not because many of the existing Indian retailers have ready platform for the foreign retailers to get into the Indian retail space," he adds.
Below is the verbatim transcript of Akash Gupta's interview on CNBC-TV18
Q: What kind of impact will this approval have on the retail space in India?
A: This is the first foreign direct investment (FDI) project in the multi-brand sector and that too after more than a year of policy being announced. So, this approval will definitely send many encouraging signals to others who are looking at India and continuing to look at this space in the sector.
Q: What does this mean for Indian retailers here? Most organised retailers are cash trapped and so, what kind of impact does this send to the Biyani's and the Bharti's of India?
A: One could definitely see more and more alliances happening going forward and why not because many of the existing Indian retailers have ready platform for the foreign retailers to get into the Indian retail space. It is not easy setting up retail business Greenfield. So, from a foreign retailer standpoint they would like to partner with some existing players and from the Indian retailer standpoint this is definitely a welcome move where government has become more supportive of the joint venture on the companies that have existing retail stores already.
Q: What does this process entail? The FIPB has given its nod, Cabinet approval is not required for this sized investment and so are we to assume that all the approvals are now in and that Tesco and Trent could look at launching MBR stores?
A: From an FDI policy standpoint, the only approval that is required is from the FIPB. Since the size of investment is not large enough and it doesn't go beyond Rs 1,200 crore, you would not require Cabinet approval.
However, when I was saying that it is not easy setting up new stores, I was more in relation to the business side of it because setting up Greenfield retail business involves setting up all backend and frontend linkages and that takes time to grow upto a certain level. This is a business of volumes and so, it would be much better for foreign retailers to look at having Indian partners in terms of existing retail stores and then go to the FIPB for approval the way Trent-Tesco joint venture (JV) happened.
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