Problems faced by organized Retail industry in India


By

Mr. R. Sethumadhavan
BSc, MBA, M.Phil
Faculty-Management Studies
Tamilnadu College of Engineering
Coimbatore-641 659
 


INTRODUCTION:

India has 12 million retail outlets. The retail sector is the second largest source of employment and the job market is hugely receptive to retailing expertise as more and more B-schools are now focusing on the sector and large retailers are setting up retail academies. It is estimated to create 50,000 jobs a year in the next five years.


MARKET SIZE:

The retail market in India is estimated at Rs.5,88,000 crore. Of this the unorganized market is worth Rs.5,83,000 crore and the organized market is Rs.5,000 crore.

OPPORTUNITY:

Over 8% of India's population is engaged in retailing. According to ASSOCHAM, the total retail market is expected to grow by 20% annually and is one of the fastest growing sectors in India.

PROBLEMS:

1. The organized retail industry in India is faced with stiff competition from the unorganized sector.

2. There is a shortage of quality real estate and infrastructure requirements in our country.

3. Opposition to Foreign Direct Investment from small traders affects retail industry.

4. Very high stamp duties on transfer of property affects the industry.

5. Shortage of retail space in central and downtown locations also hinders the growth of retail industry.

6. Presence of strong Pro-tenancy laws makes it difficult to evict tenants and this is posing problems.

7. Land-use conversion is time consuming and becoming complex.

8. For settling property disputes, it consumes lot of time.

9. Rigid building laws makes procurement of retail space difficult.

10. Non residents are not allowed to own property except they are of Indian origin.

11. Prohibition of Foreign investment in real estate business.

12. Customs duties are levied on import of goods in India.

CONCLUSION:

The organized retail industry is facing lot of opposition from traders, politicians and the government has to formulate a separate policy for the industry.

FDI needs to be encouraged and land acquisition rules required modification. Retail has to be recognized as a separate industry and to be given fair treatment by all.
 


Mr. R. Sethumadhavan
BSc, MBA, M.Phil
Faculty-Management Studies
Tamilnadu College of Engineering
Coimbatore-641 659
 

Source: E-mail August 23, 2007

          

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