India ranks second in retail potential

India ranks second in retail potential

India jumped 13 positions and was placed second in retail potential in the 2016 Global Retail Development Index ( GRDI), released by AT Kearney, a Chicago- based consultancy.

The country was ranked 15 in the previous year. The report profiled 30 developing countries.

However, a Geofin Comtrade spokesperson said, “ GCL is not aware of the proposed forensic audit. It has not received such intimation. Since GCL did not have any code modifications whatsoever in its back- office, besides all records standing reconciled with exchange trade files and neither having acted as a C& F agent, it is not possible for GCL to thereby comment on unsubstantiated news. GCL had filed a summary suit at the Bombay High Court against NSEL in July 2015, for its claim of margin and membership deposits. In that suit too, GCL relied upon the exchange acknowledged obligations.” Business Standard has reviewed a copy of Sebi’s letter to auditors. It has asked them to audit brokerages with respect to a slew of complaints received against them. These include false assurance to investors, misleading statements and mis- selling.

When contacted, NSEL said, “ We are happy that Sebi has finally initiated an audit against brokers, which was not done by former Forward Markets Commission chairman Ramesh Abhishek, despite having wide powers. In fact, the Economic Offences Wing could unearth major crimes by brokers.” Auditors said other aspects of the audit involved fund flow analysis of defaulting clients and the alleged nexus among NSEL, Financial Technologies ( FTIL) and its director. Sebi also sought an examination of alleged circular trading and suspicious transactions, client code modification for those trading exclusively on NSEL, and funding of clients through non- bank finance companies or other related entities.

Sebi is also considering an interim report prepared by the Economic Offences Wing last year that states some brokers were aware of the impending danger at NSEL.

The report mentions evidence of illegal and unauthorised changes at NSEL servers.

The names of clients on NSEL servers were found to be different from those in brokers’ records.

The NSEL brokers have been charged by investors with giving away their clients’ money without securing the title of the goods, “ warehouse receipts”, resulting in criminal breach of trust. On March 3, 2015, the Economic Offences Wing had arrested three brokers and charged them with mis- selling NSEL products, cheating, forgery and criminal conspiracy. All three are out on bail.

“India’s high ranking is driven by GDP ( gross domestic product) growth, improved ease of doing business, and better clarity regarding FDI (foreign direct investment) regulations. India is now the world’s fastestgrowing major economy, overtaking China, and retail demand is being fueled by urbanisation, an expanding middle class, and more women entering the workforce,” said Mike Moriarty, AT Kearney partner and co- author of the study. India’s retail sector has expanded at a compound annual growth rate of 8.8 per cent between 2013 and 2015, according to the report.

Analysts, however, did not agree that FDI was a key driver of retail growth in the country. They even questioned if India had made it easy to do business. They argued that while investment was allowed by the government into multi- brand retail stores, the riders put in place made it almost impossible for money to truly flow into the country.

“Most of the growth we see is driven by domestic funding. Look around, there is Aditya Birla Group or Reliance or Future, which are the biggest players in the market,” said Arvind Singhal, chairman and managing director of Technopak.

He said FDI was allowed in single brand retail stores and despite the likes of Zara and H& M, along with some other luxury brands, opening shop in India, their contributions are minimum.

“India’s growth story still comes from independent and unorganised retail markets,” he said. Singhal argued that India’s retail market was $ 550 billion, in which $ 380 billion came from food and groceries and $ 45 billion from fashion.

“Of the $ 380 billion in grocery, very little is from organised stores. Most fresh produce is still sold in the markets,” he said.

This is, however, set to change.

Business Standard New Delhi, 07th June 2016