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When FDI Comes to Town

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The fact that the Indian government is pondering upon relaxing FDI restrictions in certain retail sectors, among these sports goods, is creating all the necessary anticipation that goes with it. Sports goods worth $28 million were imported into the country in 2005-06, and the demand for such goods is expected to escalate particularly over the next three years thanks to the forthcoming Commonwealth Games in Delhi. It is being rationalized that by allowing FDI, sourcing of these items from local manufacturers would see an increase.

Vaishali Dassani, features associate, Images Retail, directs some pointblank queries at Rajiv Mehta, managing director, Puma Sports India Private Limited.

Q. Why we should invite FDI in the sports goods retail sector?

Ans- FDI in retail would mean greater capital investment, introduction of modern retailing practices, access to foreign markets for Indian retailers, and last but not the least, employment generation. It will encourage more sports brands to enter the Indian market and thereby expose customers to the unparalleled variety of sports goods.

Q. If FDI is allowed, do you think global sports goods retailers will invest in India?

Ans- Today, almost all international sports brands have a presence in India. Brands like Nike, Reebok, Puma and adidas have already explored the Indian market and carved a niche for themselves.
FDI in retail sector will definitely act as a boosting factor, thereby encouraging the existing players to expend more investment and motivating new players like Fila, Asics and New Balance to open their exclusive retail outlets in India. Competition is healthy and has always benefited the end-consumer.

Q. How, then, the retail scenario (product offering, retail ambience, etc.) will be different from the way it is today?

Ans- The coming in of various sports brands in the Indian retail sector will definitely set a new trend and introduce customers to various concepts. This is bound to inspire innovative marketing strategies, creating diversification in the entire retail ambience.

Q. Will it promote the cause of sports culture overall?

Ans- Indians are sports-crazy. In fact, sports brands touch them emotionally—creating a market for themselves. And I am sure popularization of sports brands will definitely enhance the sports culture in India.

Q. Will it hurt local manufacturing of sports goods?

Ans- Indian consumers are undoubtedly becoming more brand-conscious. Today, they are more enticed by branded merchandise than the locally made one. There will be a lot of competition for homegrown retailers to handle, but as I have mentioned earlier, competition is always healthy and ultimately benefits the end-consumer.

Q. With Commonwealth Games due in India, will it influence growth in the retail market of sports goods?

Ans- Commonwealth Games 2010 will definitely boost retail markets of sports goods. Sports brands with emotional appeal have always been able to lure more fans/crowd to grab branded sports products from the markets.

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