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Friday, July 16, 2010

Key Reasons for slow growth in Retail in India

Reasons for slow growth in retail:

1. Retail not being recognized as an industry in India
- Hampering the availability of finance to existing and new players
- Hence affecting growth and expansion plans

2. High costs of real estate
- Lease or rent of property is major area of expenditure
- This eats into the profitability of a project

Lack of adequate infrastructure
- Poor roads, lack of cold chain infrastructure
- Existing supermarkets and food retailers have to invest substantially in building cold chain infrastructure

4. Multiple and complex taxation system
- Sales tax rates vary from State to State
- Organized players have to face multiple point control and tax system
- Tax evasion by small stores
- Hence it becomes expensive to transfer goods from one store to another


5. Foreign direct investment
- FDI in pure retailing is not permitted
- One of the prime reason for slow growth of retail in India
- Global retailer can enter only by way of a franchise with Indian partner or through technological alliances

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