Entrepreneurial opportunities in Retail post FDI in India

In continuation to my previous post "Open the doors please", I would like to elaborate on why I am avid supporter of FDI in Modern Trade, aka, Supermarkets and hypermarkets like Wal-Mart and Carrefours of the world. I am presently associated with being in the supply side of FMCG, and in a small market like Oman with a population of 2.7 Million which is 1/10th of Chennai  P&G alone is doing nearly Rs 60 Crore business every month which translates to 700 crores yearly. The FMCG sector in Oman would be easily doing a minimum of 30,000 crores business yearly. Now convert this numbers when FDI is allowed in India. A metro city like Banglore or Chennai would do 5 times this business and the amount of revenue generated through taxes would be huge. Lets look at the positives of FDI first.

Assortment

All consumers today look for a wide variety of products to choose from. Opening up of the markets would give consumers products from every nook and corner of the world. Today, while I walk through the supermarkets in Oman, I am seeing products that have not reached the Indian markets simply because these companies found it difficult to operate a distribution network. Assortment not only gives one a choice, at the same time, it will provide a life style change that is important for every society to grow towards more advancement. 

Associates

Opening up of large retail chains would result in businesses for associates. Just like when a Hyundai and VW set up shop in Chennai, and the manufacturers of automobile components came up and now we fondly refer to Chennai as the Detroit of the East. Similarly when supermarkets and hypermarkets open, there are several industries that stand to benefit, from  the small scale industries which make the shopping carts to large advertising and marketing gianklts. Hence one major gainer apart from the retail players would be the associates. 

Entrepreneurs

Entrepreneurs who wants to be in the FMCG sector stands to gain the most. Imagine that I am a pickle manufacturer. While as a good businessman, my focus should be in "Product" making it the best, opening up of new markets would give me an opportunity to Sell without actually working on setting up a distribution and logistics network. Plus as the business grows, I would be generating enough capital to move up or down the value chain by doing either forward or backward integration. This is a good enough opportunity and my readers when you consider being entrepreneurs, this is one of the ways to look at opportunities in the system. 

Infrastructure

Infrastructure is a key component of any developmental activity. The employment thus generated and its allied industries like iron & steel, aluminium, IT components & networks, industries associated to these industries such as energy etc will get an overall boost. While once FDI proposal is passed, the first things that will change is the land prices and the initial 2 years revenue generated would be exclusively from Infrastructure. 

Logistics & Supply Chain

The second biggest gainers would be Logistics. While FMCG term itself is "Fast Moving Consumer Goods," everything in this setup backward has to be fast. This calls for professional logistics and supply chain management and warehousing. This is a capital intensive service sector and there are huge opportunities to be tapped in this particular segment. I am still trying to research on how much this sector has grown in established open retail markets. 

Summing Up while there is no denying fact that there are flaws in the best laid plans, a competing industry will itself sort out the deficiencies and the survival of the fittest will happen. I would be soon blogging on the objections raised by the political class in terms of fear of loss of jobs etc. Till then I would like to see your inputs on where business opportunities exists when the market is opened up for modern retail .

Open the doors please !

India does  not seem to be a colorful land at present. But across, the country one prominent color seems to stand out. Red. I know I am exaggerating. But with one entire industry in Red -Airlines, Automobile sector on a nose dive growth, and currency loosing its value like the bollywood movies, the picture is definitely not rosy. Far apart form the economics of it, inflation is at an all time high, which seems to be a an issue of  supply side deficiency &  with RBI rising the rates 10 times in as many months have failed to curb inflation and has resulted in the consumer bearing the brunt of paying more each fortnightly. As quoted by prominent scientist Dr Swaminathan, there is demand supply gap for vegetables and fruits and other commodities.(www.goo.gl/0qVf1).
Apart form this we are completely having no industrial policy being passed in the last 12 months. The govt seems to be confounded by a plethora of corruption scandals and one man trying to bring the government to its knees, have weakened policy making and has resulted in chaos at home. I know there is no magic wand, but when opportunity exists in the domestic market its a crime not to utilize it well. When I talk about opportunities, I can easily reflect on the industry that am working with. FMCG and organized retail will bring a revolution and look at the opportunities associated with it. From logistics to packaging, real estate to supply chain management, the growth that it will bring about is humongous. Not that I am talking something new, but no one seems to be paying a heed to this at all. Today I woke up to the news of cabinet passing the law to raise FDI in single brand retail. Its a good step forward. But I fail to understand why when it comes to passing a bill that primarily benefits developed nation (read Americans), aka Nuclear Bill, FDI in retail, we take ages and ages. Why do we fear. Why do we underestimate that Indian companies will suffer. Why dont we trust our entrepreneurial abilities ? When the telecom revolution happened, Airtel, was the leader among all. Before Koreans could invade us with their TV's we had our Videocon. And, even now, the Micromax et all are doing well exceeding expectations. Hence time has come for us to just open up, we Indians are fighters, and am sure we will rise up to the occasion and will not let a Wal - Mart rule us and , for sure only good will be done to the major population.
Before I close, I must insist that, only countries with good focus on internal policy will have a say in the world. Learn from the Chinese. 20 years they spend working on creating strong internal policies that generated growth and development, today because of which they have a voice in this planet. Americans always had a strong internal policy of encouraging innovation & entrepreneurship, because of which they are what they are, they lost the plot when they went for a war. I simply believe that, one strong internal policy of opening up of the economy led us to where we are and ,as they say in philosophy, look within and you ll find answers to all your problems.
Betting on a bright India, I just welcome all investors to trust this land its people. Dr. Singh, please open the doors for these gentlemen, trust us, we ll take care of ourselves. !!