Regulating Retail Distribution India Competition and Regulation Report, 2011 Suparna Karmakar Senior Fellow, CIRC New Delhi, April 20, 2011

Introduction Fastest growing sector in india – consistent double digit growth for nearly a decade Major contributor to GDP – about 14% of the Indian GDP is contributed by the retail and wholesale trade India is the most attractive emerging market destination for retail investment Dominated by the unorganised sector – share in revenue nearly 95% ◦ Organised retailing has few large sellers and is limited to urban buyers; but growing market share and expected to nearly reach USD100 billion, and 12.4% of total retail sales 2

Present Regulatory Regime Sector not regulated by any exclusive central regulatory framework, yet to get industry status ◦ Subject to applicable local laws/sector regulations FDI is prohibited in retail trading, except for ◦ Upto 51% under government route in single brand product retailing, branded during manufacturing ◦ Upto 100% under automatic route in storage and warehousing, incl. that of agricultural products with refrigeration ◦ Upto 100% under automatic route in cash & carry trading/wholesale trading 3

Regulatory Issues/concerns Analysis of the applicable laws and sector regulations, incl. divergences in state laws ◦ Shops and establishments act ◦ Weights and measures act ◦ Multi-modal transport of goods act ◦ Internal market issues - Octroi and other taxes ◦ Customs act/SEZ provisions ◦ Companies act ◦ Urban planning, zoning, sourcing regulation ◦ Land acquisition/real estate costs & issues ◦ Labour laws, incl. contract labour act ◦ Other Licences & Approvals needed, etc 4

Scope of Study Address promotion of competition, both at the pre-entry level (viz. multi-brand retail FDI issues) and post-entry in the different activities complementing/affecting retailing ◦ Predation, pre-requisites for a level playing field Analyse the sub-sector/industry and state laws/regulations governing retail trading ◦ Domestic establishment and trade regulations, and those relating to importation/logistics SCM Lessons from rest of world Discuss the usefulness of creating an independent regulator in this sector 5

Competition in Retail in India Address promotion of competition, both at the pre-entry level (viz. multi-brand retail FDI issues) and post-entry in the different activities complementing/affecting retailing ◦ Predation, pre-requisites for a level playing field Analyse the sub-sector/industry and state laws/regulations governing retail trading ◦ Domestic establishment and trade regulations, and those relating to importation/logistics SCM Lessons from rest of world Discuss the usefulness of creating an independent regulator in this sector 6