Apparel April 2019 Apparel April 2019 issue | Page 26

MARKET WATCH
Indian Retail Market to
Grow by 150 Per Cent
by 2026
The Indian retail market is forecasted to reach
US$1,750 billion by 2026 from US$670 billion in
2017, registering a growth of over 150 per cent.
Retail mall space in seven top cities in India is set
to see a threefold increase in 2019 as the new
e-commerce policy is likely to force online retail
entities to actively invest in offline stores. With the
new e-commerce policy aiming to bring a level
playing field between online and offline players,
experts have said that the customer footfall in
retail malls is also likely to go up.
In a report released recently, property
consultancy firm Anarock estimates 10 million
sq. ft. of fresh retail mall space will come up this
year from 3.2 million sq. ft. in 2018. According
to the new e-commerce policy, huge discounts
offered by large e-commerce players will have to
be phased out in two years, which will ensure fair
competition between online and brick-and-mortar
stores. Additionally, the exclusive tie-ups between
vendors and e-commerce firms are also no longer
permitted under the new regime.
Registration Mandatory for
Foreign Online Retailers:
Policy
All foreign online retailers will have to register
themselves in India if they want to set up
e-commerce platforms and carry out business
in the country. They should also channelise all
product shipments through the customs route,
as per the draft e-commerce policy. The draft
document, for which the commerce ministry
has sought feedback by March 9, focuses on
boosting exports rather than increasing imports
into the country.
The policy document deals with six broad
issues in the e-commerce sector: data,
infrastructure development, e-commerce
marketplaces, regulatory issues, stimulating
domestic digital economy, and export promotion
through e-commerce. The move will impact
foreign online retailers, especially entities based
in China, who will have to get registered in India if
they are to do business in the country.
The draft e-commerce policy states that all
e-commerce sites or apps available for download
in India must have a registered business entity in
India as the importer on record or as the entity
through which all sales in India are transacted.
This means that all the overseas entities should
have a presence in India if they are to undertake
e-commerce business in the country. Currently,
Chinese online retailers such as Shein, AliExpress
and Romwe are taking advantage of lack of
regulatory curbs in India.
India’s New E-Commerce FDI Rules are Just What Offline
Retailers Wished for
The spate of recent bad news that has hit Indian e-commerce players of late offers an opportunity for the country’s brick-
and-mortar retailers.
Offline retailers in India faced no pressure to slash prices in February, whereas most e-commerce portals were forced
to take down thousands of products from their portals to meet new government regulations, global research firm Jefferies
said in a note on February 26, 2019.
“Online retailers went soft in February with no key discounting or promotional events,” Jefferies India said, adding
that this is in contrast to the sharp discounting they carried out in January to clear inventory and align with the new
e-commerce rules.
In recent years, it has become a regular practice for bargain-hungry shoppers in India to match store prices with online
rates, which are most often lower as e-commerce portals undercut shop owners to woo customers.
However, February began on a rough note for e-commerce as India’s new foreign direct investment (FDI) policy
kicked in. The new rules bar online retailers from engaging in price wars and deep discounting, among other things.
Brick-and-mortar retailers could be in for even better times if the Government’s proposed e-commerce policy is
implemented. On February 23, the Narendra Modi government released a draft national e-commerce policy which has
proposed stringent norms for data storage and combating counterfeit goods. This “bodes well for domestic retailers in
our view,” Jefferies India noted.
20
I APPAREL I
April 2019