Retailers could gain from Indian reforms, says Shakespeares

MIDLANDS retailers stand to gain as India relaxes its rules on inward investment, according to Birmingham law firm Shakespeares.

In a highly significant move, the Indian Government is allowing single brand retailers such as Marks and Spencer, Debenhams and The Body Shop, which already operate in the country, to do so without an Indian partner for the first time. Both existing players and new entrants will now be able to acquire, invest or increase their shareholding up to 100% – beyond the previous limit of 51% on Foreign Direct Investment (FDI) in the sector.

Viplavi Mahendra, head of the India team at Shakespeares, suggests this presents an opportunity for the likes of Midlands retailer Next.

“India ‘s decision to open the door wider to retail investors is a significant opportunity when you bear in mind that the country has a growth rate of around 10% – much higher than in the UK or in other more traditional export markets, such as Europe and North America,” she said.

“Most people don’t realise that the Indian retail market is valued at $450bn and is expected to rise to $825bn by 2015. With a population of 1.2bn, the country has a thriving consumer base, which is expected to exceed 300m by 2015 – equivalent to the entire population of the US. As a result, demand for luxury and international, branded goods is growing.”

However, she warns that compliance regulations for retailers in India are detailed and complex, applying at both national and federal levels.”