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The Growth in Retail Sector is not due to any Government policy – Dr. Ajay Dua

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Excerpts of the inaugural speech by Dr. Ajay Dua, Secretary, Departmentr of Industrial Policy & Promotion, Govt. of India, at the ASSOCHAM – India’s Retail Revolution – Managing the Change,

The growth in the Retail sector is not due to the government policy or any other policy change in the FDI front. It is only because of the potential that the retail sector in the country possesses, which is drawing so many people to enter this sector.

Our constitution allows every person to choose any profession that they like. It is purely due to the economical and social reasons and not any other reason. One other thing that is adding impetus to the retail boom in the country is the increase in disposable income of the middle class.

There are approximately 784 towns with the population of over 50, 000, in the country. The trends suggests that the in such towns both the spouse are earning. With this increased income they are more interested in buying things which are not available in the regular mom-and-pop stores. This is giving the retail sector a boom in the tier I and tier II cities.

The problem that I see as of now is that not much has been invested it the supply chain. Most retailers that have come to this country are apparel brands. The new breed of Indian retailers like Reliance is investing in the supply chain. For the growth in this sector, new players will have to invest in the supply chain.

The worries that were sounded by Mr. D. Raja, I think don’t have any standing in the real scenario. I agree that much is needed in the agricultural sector if as Mr. Raja said nothing is done in this sector; people from this sector will migrate to another.

Supply chain is needed by the new malls and format stores that are coming up or are about to come up, as well as by the traditional stores. So why do we say that one will be at the expense of other?

The retail real state prices are so high that it is virtually becoming impossible for retailers to invest. The new pattern that will emerge is the sharing of the retail real estate by many people, for example if you go to shop for grocery in a mall, someone from your family is getting medical attention by a doctor in the same mall. So, this is what sharing of retail real estate is and in the future if retailers have to have presence, it will be in this format. Due to high prices of real estate the city centres in bigger cities will get less malls or format stores. In fact these will shift to the suburbs of the city where the real estate is much cheaper.

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