Retail Mantras

French Retailer Auchan enters India

noreply@blogger.com (Unknown) — Mon, 05 Nov 2012 20:17:00 +0000

The Euro 45 billion (Rs 3 lakh crore) French retailer Auchan Group has entered the expanding Indian retail market through a franchise agreement with the Dubai based Landmark Group who have recently ended their agreement with Dutch retailer Spar International.
The only change that the current Spar Hypermarkets in India would have is a new name ' Auchan' though the look and merchandise remains the same .
With the rebranding process in place, Auchan plans to change the visual aspects of the stores with the India model evolving progressively.
The company intends to open 12 to 15 hypermarkets every year.

' India Fifth most Attractive Retail Market '

noreply@blogger.com (Unknown) — Wed, 27 Jun 2012 06:13:00 +0000

Despite the recent flip-flops over enhancement of FDI cap in the retail sector, India has emerged as the fifth most favorable destination for international retailers, outpacing UAE, Russia, Indonesia and Saudi Arabia.

"India remains a high potential market with accelerated retail growth of 15-20% expected over the next five years. Growth is supported by strong macro economic conditions, including a 6-7% rise in GDP, higher disposable incomes, and rapid urbanization," said a recent report by global management consultancy firm A T Kearney.

The approval of 100% FDI in single brand retail, especially, will give a fillip to the sector in the country prompting several international retail chains to explore the market either on their own or through local partners, the report said.

Companies such as GAP, IKEA, Abercrombie & Fitch have already stepped up inquiries for an entry into the market, despite the rider of 30% local sourcing for single brand foreign retail chains.

According to the entity's Global Retail Development Index (GRDI) 2012, India ranks fifth after Brazil, Chile, China and Uruguay.

With the developed markets witnessing an economic turmoil, emerging countries are fast becoming the retail hotspot for foreign brands, with most of them seeing faster growth here compared to their home markets.

In the past five years, retail chain giants like Walmart, Tesco, Metro Group, saw revenues in developing countries grow 2.5 times faster than their home markets, the report said.

Even in the food and beverage industry, India is fast becoming an important investment destination for foreign players with companies like Starbucks which is planning to enter India this year and American brand Dunkin' Donuts which recently entered the country in partnership with local franchisee Jubilant FoodWorks.

The Times of India. June 27, 2012

IKEA Plans Entry into India

noreply@blogger.com (Unknown) — Tue, 26 Jun 2012 00:58:00 +0000

Swedish homeware company Ikea has announced its plans to invest Euro 1.5 billion in India for setting up 25 retail stores as wholly-owned subsidiaries following months of clarificatory discussion with the government on the compulsory clause of domestic sourcing of inputs from local small companies.
A formal proposal was submitted to the foreign investment promotion board or FIPB on Friday requesting it to grant approval to Ikea India to hold 100% FDI in 25 stores across the country. The proposed investment in the stores would be to the tune of Euro 600 million in the first stage and Euro 900 million in the second stage.

Source : Economic Times

Hariyali Bazaar downing Shutters

noreply@blogger.com (Unknown) — Sun, 24 Jun 2012 07:22:00 +0000

Reliable sources inform that the largest retailer in rural India is shutting shop. The 300 plus store chain is owned by the DCM Shriram Consolidated Ltd group whose chairman is Ajay Shriram.
Hariyali has been operation for the last 9 years in rural India and each store is stocked with the categories of Agri products, Food and Groceries, Household goods including white goods and electronics and Lifestyle products such as apparel and footwear.
The chain operates under 2 formats - the larger Centers which were built on plot sizes of 2-5 Acres with a built up area of around 10000 sq ft. and the smaller Stores with an area of 1500 to 5000 sq ft. The larger centers are owned by the company and many of these have a petrol pump as well as LPG to offer.
The process of issuing notices to staff has already begun and liquidation of stocks is well underway.
It is believed that mismanagement, location of the stores and lack of transparency ( particularly in the last 2 years ) led to this downfall.

Indian Consumer Electronics and Durables to reach Rs 52,000 crores

noreply@blogger.com (Unknown) — Tue, 01 May 2012 07:47:00 +0000

According to a press release by Assocham on 27th April, the Indian Consumer Electronics and Durables Sector to reach Rs 52,000 crores ( US$ 10,000 Million)

Growing at a compounded annual growth rate (CAGR) of about 15 per cent, the consumer electronics and durables sector in India is likely to reach Rs 52,000 crore by 2015, apex industry body ASSOCHAM said today.

The consumer electronics and durables industry is currently poised at about Rs 34,000 crore according to a study titled ‘Emerging trends in Consumer Electronics and Durables Industry,’ released by The Associated Chamber of Commerce and Industry of India (ASSOCHAM).
While, global consumer electronics and durables industry is growing at about 10 per cent CAGR and is currently estimated at about Rs 16 lakh crore and is likely to cross Rs 21 lakh crore mark by 2015, according to the ASSOCHAM study.
“Demand for consumer electronics and durables is driven by a young demographic population, coupled with rising disposable incomes amid skilled and highly educated workforce,” said Mr D.S. Rawat, secretary general, ASSOCHAM while releasing the findings of the study.
“Besides, low penetration levels, easy availability of finance options, growing prominence of consumer electronics’ retail stores, online retail industry and a robust 400 million plus Indian middle class with a comprehensive rise in level of affluence is also fuelling the demand in this industry,” said Mr Rawat.
Multi-national companies (MNCs) with superior technology and better quality control account for a market share about 70 per cent of the overall consumer electronics and durables market in India and maintain a strong hold on the urban middle class segement growing at about 12 to 15 per cent, according to the ASSOCHAM study.
The consumer durables and electronics market in rural and semi-urban areas account for about 40 per cent of the overall market and is growing at about 30 per cent CAGR.
Consumer electronics and durables market in India is divided into three segements namely – white goods, brown goods and consumer electronics.
Air-conditioners, refrigerators, washing machines and other domestic appliances fall in the white goods’ category, while microwaves, chimneys, fans, irons, juicers, mixers and grinders fall in the category of brown goods. Television sets, audio and video players, personal computers, laptops, cell phones, digital cameras, camcorders and other electronic accessories fall in the category of consumer electronics.
Rising technological innovations and the decrease in import duty on flat panel LCDs/LEDs television sets in the budget is also likely to fuel demand in the industry.

Source :The Associated Chambers of Commerce and Industry in India

Consumer electronics & durables to reach Rs 52K crore by 2015: ASSOCHAM
Friday, April 27, 2012

UNION BUDGET AND ECONOMIC SURVEY

noreply@blogger.com (Unknown) — Sun, 18 Mar 2012 04:59:00 +0000

The link for the detailed Union Budget and Economic Survey of India for the year 2012-13 of the Goverment of India is given below.

UNION BUDGET (2012-13) AND ECONOMIC SURVEY (2011-12) OF INDIA

Highlights of Union Budget 2012-13

noreply@blogger.com (Unknown) — Fri, 16 Mar 2012 07:56:00 +0000

MAJOR HIGHLIGHTS OF THE UNION BUDGET OF INDIA OF 2012-13

Tax payer exemption limit to be raised to Rs 200,000 from Rs 180,000.
Income Tax at 10% for Rs 2-5 lakh
No change in corporate tax rates
Cars to attract ad valorem rate of 27 per cent
Customs duty on import of parts of aircraft, tyres and testing equipment fully exempted
Withholding tax on power, airlines, road and bridges, ports and shipyard, fertilisers, dams and affordable houses lowered to 5 pc from 20 pc for 3 years
Full exemption from basic customs duty for equipment for road and highway construction.
Import of equipment for fertilizer plants fully exempt from customs duty for three years.
Standard excise duty rate raised from 10 per cent to 12 per cent.
Service tax to yield additional revenue of Rs 18,650 crore.
All services except 17 in the negative list to be brought under service tax net.
Rs 193,407 crore provision made for defence services in 2012-13.
Rs 3,915 crore to be spent on National Rural Livelihood Mission.
Rs 1000 crore to be provided for National Skill Development Corporation in 2012-13
Interest subvention of 7 pc to women self groups for loans up to Rs 3 lakh, additional 3 pc for those making timely repayment.
Rs 20,822 crore earmarked for National Rural Health Mission against Rs 18,115 crore this year
Rs 20,000 cr to be spent on rural infrastructure development, including Rs 5,000 cr for creating warehousing facilities.
Agriculture credit target to be raised by Rs 100,000 cr to Rs 5,75,000 cr, says FM
Additional 3 per cent interest subvention to farmers for promptly repaying their dues
Rs 15,850 cr to be allocated to Integrated Child Development Scheme in 2012-13 as against Rs 10,000 cr this fiscal.
Allocation for rural drinking water and sanitation scheme increased from Rs 11,000 cr in FY 12 to Rs 14,000 cr in 2012-13.
National Backward Region Grant scheme outlay raised by 22 per cent to Rs 12,040 crore
Government to set up Rs 5000 crore venture fund for MSME sector.
India will become self-sufficient in urea production in five years, says FM
External commercial borrowings to the extent of USD one billion to be allowed for aviation sector for next year.
Infrastructure investment in 12th Plan to go up to Rs 50 lakh crore; half of it to come from pvt sector: FM
Govt to double tax free bonds for infrastructure financing to Rs 60,000 crore in next FY: Pranab
8,800-km of highways to be developed under National Highway Development Project in 2012-13: FM
Rs 15,888 cr to be provided for capitalisation of public sector and regional rural banks and NABARD
Microfin institution regulation bill, natl housing bank regulation bill, reg bank regulation bill and public debt management bill this session.
Rs 15,888 cr to be provided for capitalisation of public sector and regional rural banks and NABARD.
Rs 10000 crore of tax fee bonds for power sector
To allow ECB funding to finance working capital needs of airlines
To become self sufficient in urea production in next 5 years
Share of manufacturing in GDP will be increased
To allow ECB to fund part finance power rupee debt
Oil and gas pipelines to be eligible for viable gap funding
Inflation & current account deficit to come down next year
Focus on removing infrastructure bottlenecks
IPO equity offer above Rs 10 crore will have to be made electronically in capital market reforms.
Government to raise Rs 30,000 crore in 2012-13 from disinvestment of stake in PSUs.
Income Tax deduction of 50 per cent on investments of up to Rs 50,000 in savings scheme named after Rajiv Gandhi.
Efforts to arrive at broadbased consensus with state governments on allowing FDI in multibrand retail up to 51 per cent, says FM
Ensure rapid rise in private investment
Frame policies that trigger domestic demand recovery
India's GDP to grow by 7.6 per cent in 2012-13; plus, minus 0.25 per cent
India's GDP to grow by 6.9 per cent in 2011-12
Economy is now turning around, manufacturing appears to be on revival
Headline inflation to moderate further in next few months
We have to expedite decisions to improve delivery systems
Have to accelerate the pace of reforms
Numerous economic indicators suggest economy is turning around
Govt to fully provide for food subsidy and food security act in 2012-13.
Pilot project for direct transfer of subsidiary for kerosene has been initiated in Alwar, Rajasthan.
To implement DTC at the earliest
To bring down subsidy to 1.7 % of GDP in the next 3 years
To roll out computerized scheme for fertilizer subsidy transfer
Significant slowdown in growth over the last two years
To address black money, corruption in public life
To enhance supply side; cut infra bottlenecks
To focus on domestic demand, raise private investment
Manufacturing sector appears to be on a revival path
Needs to improve supply side management of economy
Fiscal deficit rose due to subsidy
High crude oil prices hit growth, averaged $115/bbl in 2011-12

Source : Compiled by G.D. Bhatnagar, Head IT of Hariyali Kisaan Bazaar

Menswear Market in India

noreply@blogger.com (Unknown) — Mon, 13 Feb 2012 15:31:00 +0000

According to Technopak Advisors, a retail consultancy, the entire textile and apparel industry (2010 estimates), including domestic and exports, is pegged at Rs 3,27,000 crore and is expected to grow by 11% to Rs 10,32,000 crore by 2020. Currently menswear is the major chunk of the market at 43% (Rs 72,000 crore) and is growing at a compounded annual growth rate (CAGR) of 9%.

The menswear market in India is the fastest growing apparel segment. The India Menswear Market Analysis 2010-2014 by Venn Research found that total revenue from menswear was $11.8 billion in 2009, representing a CAGR of 8.6% from 2005 to 2009. Industry estimates peg the formal suits, jackets and blazers segment at Rs 4,500 crore.

Source : Economic Times 12.02.2012

Growth in the Indian Retail Sector

noreply@blogger.com (Unknown) — Mon, 30 Jan 2012 08:17:00 +0000

The retail sector in India has shown a healthy growth and is fast emerging as one of the largest sectors in the economy. The sector has grown from a level of US $ 201 Billion to a market size of US $ 425 Billion in 2010.

The Industry has been growing at a compound annual rate of 6.4% since 1998.

Source : EIU Euro Monitor

Retail Penetration in 2011

noreply@blogger.com (Unknown) — Sun, 22 Jan 2012 05:06:00 +0000

Organised retail in India is still in its nascent stage and hence offers immense potential. India currently has a small 6% penetration in organised retail , while a country like the US has a high 85% penetration. Given that there is a double digit economic growth projection for India in the following decade, the future has immense potential for the growth of organised retail in India.

The chart below shows retail penetration across some countries.

Source : E&Y Report, Aranca Research

MONTHLY ECONOMIC REPORT - MINISTRY OF FINANCE

noreply@blogger.com (Unknown) — Sun, 15 Jan 2012 06:14:00 +0000

The monthly Economic Report issued by the Ministry of Finance, Goverment of India for the month of November 2011 can be accessed by following the link below

MONTHLY ECONOMIC REPORT - NOV 2011

This report is published on a monthly basis by the Ministry of Finance

RURAL BUYING DRIVES FMCG GROWTH

noreply@blogger.com (Unknown) — Sat, 14 Jan 2012 05:22:00 +0000

Noodles, macaronis and soft-drinks made rapid inroads into the rural markets driving up growth in the fast moving consumer goods (FMCG) industry - 10% by volume and 12% by value - in the first ten months of 2011. The consumption story for most part of last year dispelled slowdown fears as Indian rural households piped urban counterparts in growth sweepstakes.
Rural India had clocked a negative volume growth during 2010 (here volume growth is the increase in sales clocked over last year while value growth is volume growth plus price hikes). The urban FMCG market on the other hand, grew 4% by volume and 7% in value and was led by categories such as ready-to-eat mixes, deodorants, breakfast cereals and soups. Growth for personal care products such as toilet soaps, shampoos and household products stagnated compared to last year, while F&B space saw a healthy growth. Sources said the F&B market witnessed hectic action in rural India with players like ITC and Hindustan Unilever (HUL) leveraging their distribution muscle to push products in this category. ITC's Sunfeast noodles and HUL's Knorr brand of soups have been able to penetrate the hinterland leading to increase in the category reach.
The FMCG biggie saw its personal, oral care and health supplements report strong growth in the rural markets. While the low-penetrated products in the F&B space witnessed good growth, detergents, washing soaps stagnated volume wise. In the urban market emerging categories, noodles, macaroni, vermicelli grew 20% in terms of volume, while ready-to-cook mix products saw a whopping 64% growth and soups grew by 20%. In the personal care category, which largely remained stagnant in the urban market, deodorants saw a 31% growth.
There have been some concerns over consumer spending with price hikes being taken across the board by FMCG companies to offset the impact of rising input costs. Because of healthy disposable income growth and lower absolute spends on FMCG products it hasn't impacted the consumption yet, however if there is uncertainty around income growth risks of down trading exist.

Source : Times of India (Electronic Edition): January 12, 2012

India most-preferred new destination for global retailers: Study

noreply@blogger.com (Unknown) — Tue, 27 Sep 2011 16:48:00 +0000

The Economic Times: September 27, 2011

Berlin: India may not have opened its retail industry to foreign investors yet, but it's the most preferred new destination for global retailers who bet on emerging markets to offset worsening economic conditions in the developed world. India topped the list in a survey of 323 international retailers about the markets they entered for the first time last year, done by property agents CB Richard Ellis.

"If many retailers are already entering the Indian market, then I don't think there is so much of an entry barrier," said Neville Moss, director - head of EMEA Retail Research at CB Richard Ellis. "International retailers will just be more confident on the sense of ownership given in a foreign country," he added.

That could by why several delegates of global retailers at the annual World Retail Congress in Berlin seem to have taken a wait-and-watch approach to investing in India. "We think India has the potential but, honestly, we haven't even studied the market yet," said Janet Grove, vice chair at US department stores chain Macy's, which is now gung ho on China. "India is down the road, but first will be China." According to the CB Richard Ellis study, which covered 75 countries, eight retailers entered India last year while seven entered second-placed Turkey.

In terms of international retailers present in a country, India still ranks 35 with just about one-fourth retailers present in the country. China is ranked seventh, with 46% retailers' presence, in the list topped by the UK with 57.6% retailers present in 2011. New Delhi ranked as the fourth most popular city for new retail entrants at city level. Retailers are increasingly looking at economies such as India and China, which have the best growth prospects and are least likely to be affected by austerity measures.

RETAIL IN INDIA

noreply@blogger.com (Unknown) — Mon, 13 Jun 2011 07:49:00 +0000

Some Facts and Figures about Retail in India :

RETAIL SALES in India will grow from the US$395.96 Billion ( Rs 17818.20 Billion) in 2011 to US$ 785.12 Billion ( Rs 35330.40 Billion) by 2015. (Source : Business Monitor International)

Sales through MGR outlets ( Mass Grocery Retail) is expected to increase by 218% by 2015 to reach a level of US$ 27.67 billion ( Rs 1245.15 Billion)

Organised retail in India is expected to increase from 5 per cent of the total market in 2008 to 14-18 per cent and reach US$ 450 billion by 2015, according to a McKinsey & Company report titled 'The Great Indian Bazaar: Organised Retail Comes of Age in India'.

By 2012, around 55 million square feet of retail space will be ready in the national capital region ( NCR), Kolkata, Mumbai, Chennai, Bengalaru, Hyderabad and Pune. The organised retail real estate stock will therefore grow from the existing 41 million sq ft to 95 million square feet. ( Source : India Organised Retail Market 2010 by Knight Frank India)

According to the report ‘Strong and Steady 2011’ released by global consultancy and research firm PricewaterhouseCoopers (PwC), India's retail sector, which is currently estimated at about US$ 500 billion, is expected to grow to about US$ 900 billion by 2014.

According to a report by KPMG, food retail sector in India is set to more than double to by 2025 to US$ 150 Billion ( Rs 6750 Billion). This would be driven by growth of organised report coupled with changing consumer habits.

AT Kearney in its 9th annual Global Retail Development Index (GRDI) 2010 has ranked India as the 3rd most attractive nation for retail investment among 30 emerging markets.

Foreign direct investment (FDI) inflows between April 2000 and January 2011, in single-brand retail trading, stood at US$ 128.34 million, according to the Department of Industrial Policy and Promotion (DIPP).

Source : IBEF

RAM CHANDRA AGARWAL PLANS RETURN TO ORGANISED RETAIL

noreply@blogger.com (Unknown) — Tue, 07 Jun 2011 05:52:00 +0000

Ram Chandra Agarwal, the founder of Vishal Retail Ltd, is planing a return to organized retail in two to three months with the brandname V2.

Agarwal, who started out as an entrepreneur selling readymade garments in a 50 sq. ft store at Lal Bazaar in Kolkata, will focus on garment retailing, aiming to eventually get among the top five retailers in India.

“I believe as a business, retail has got big potential as 10 out of top 50 businessmen around the world are from retail business. In our earlier innings, due to some unavoidable circumstances we could not succeed. V2’s USP will be branded-type quality in 50% to 70% less than the branded price, (thus) delivering huge value to customers,” Agarwal said in an e-mailed reply.

In March, the assets and liabilities of debt-strapped Vishal Retail were sold to TPG Wholesale Pvt. Ltd, a subsidiary of TPG VW Ltd, and Airplaza Retail Holdings Pvt. Ltd, owned by the Shriram Group. The TPG-Shriram combine paid Rs.70 crore to Agarwal and could use the brand names Vishal, Vishal Megamart and Vishal Fashion Mart for a period of five months.

The founders will hold about 55% stake in V2, while the remaining 45% will be held by small shareholders, Agarwal said. The initial investment will be in the region of Rs.15-20 crore. The brand will launch eight to 10 stores with a total showroom area of 100,000 sq. ft in the national capital region and Himachal Pradesh. It will be headquartered out of New Delhi with 60-70 retail professionals managing its operations. The target customer is the middle class Indian who earns between Rs.15,000 and Rs.100,000 a month.

A McKinsey report had predicted that by 2025, India’s middle class would have swelled from 50 million to 583 million—about 41% of the population. These households will see their incomes balloon to Rs.51.5 trillion —11 times the level of 2007 and 58% of total Indian income.

Source : Mint News - May 2011. Author Shraddha Nair

IS WALMART DITCHING BHARTI IN FAVOUR OF FUTURE GROUP ?

noreply@blogger.com (Unknown) — Tue, 29 Mar 2011 07:44:00 +0000

Senior officials of Walmart and Future Group have had a series of meetings in the past four months raising speculation on the possibility of a tie up between the world's largest retailer and India's largest retailer. It is understood that Mr Kishore Biyani, owner of Future Group specially flew down to Bentonville, US, Walmart's headquarters to meet Mr Doug McMillon, president and CEO of the company in December 2010. There have also been a series of meetings with senior executives since then.
It is however reported that both companies have denied that there is any development. These meetings though could have an impact on current relations of Walmart with Bharti. It must be remembered that the partnership between Walmart and Bhart Group is 'non exclusive' in nature which means that Walmart can enter into agreements with other parties. Walmart currently has an equal joint venture with the Bharti Group only. Bharti Walmart operates in the wholesale and back-end segments - the two areas in retail where foreign players are currently allowed.
Bharti Walmart currently has 5 wholesale cash and carry outlets under the name of 'Best Price Wholesale' and 117 'Easy Day' stores that are run by Bharti Retail.

Source : ET29032011

ON THE WARPATH

noreply@blogger.com (Unknown) — Sat, 19 Mar 2011 05:17:00 +0000

Modern Retail chains like Chroma, Next etc. are in battle with India’s leading CDIT product manufacturers over margins and terms of trade. These retailers led by Chroma are taking a tough stand and bargaining for higher margins and are toughening trade negotiations with global multinationals like Samsung, LG, Nokia amongst others. The industry operates on very low margins- the average trade margins in CDIT range between 10% and 19% but for modern retail, the figure is much lower at 8-10%. Besides margins, traditional trade channels also get special channel discounts, and other benefits which the manufacturers do not pass on to modern trade. It is to be seen who has the final say in the $ 24 Billion CDIT industry .

Source ET 03122011

VISHAL RETAIL READY TO HAND OVER OPERATIONAL CONTROL

noreply@blogger.com (Unknown) — Sat, 12 Mar 2011 17:54:00 +0000

The TPG-Shriram Group takeover of Vishal Retail is in its final stages, The combine is now expected to takeover operational control of the debt ridden Vishal Retail in the next few days.
After almost of year of negotiations, the private equity firm TPG Capital and Chennai based Shriram Group had come to an agreement with Vishal Retail in September to take over the setup.
It is understood that all the finer details have been worked out and the combine will now takeover operational responsibility. Vishal Retail today has a chain of 80 outlets spread across India.

KEY FEATURES OF INDIAN BUDGET 2011-12

noreply@blogger.com (Unknown) — Tue, 01 Mar 2011 12:50:00 +0000

OPPORTUNITIES

Swift and broad based growth in 2010-11 has put the economy back to its pre-crisis growth trajectory. Fiscal consolidation has been impressive.
Significant progress in critical institutional reforms that would set the pace for double-digit growth in the near future.
Dynamism in the rural economy due to scaled up flow of resources to the rural areas.

CHALLENGES

Structural concerns on inflation management to be addressed by improving supply response of agriculture to the expanding domestic demand and through stronger fiscal consolidation.
Implementation gaps, leakages from public programmes and the quality of outcomes pose a serious challenge.
Impression of drift in governance and gap in public accountability is misplaced. Corruption as a problem to be fought collectively. Government to improve the regulatory standards and administrative practices.
Inputs from colleagues on both sides of House are important in the wider national interest.
Budget 2011-12 to serve as a transition towards a more transparent and result oriented economic management system in India.

OVERVIEW OF THE ECONOMY

Gross Domestic Product (GDP) estimated to have grown at 8.6 per cent in 2010-11 in real terms. Economy has shown remarkable resilience.
Continued high food prices have been principal concern this year.
Consumers denied the benefit of seasonal fall in prices despite improved availability of food items, revealing shortcomings in distribution and marketing systems.
Monetary policy measures taken expected to further moderate inflation in coming months.
Exports have grown by 29.4 per cent, while imports have recorded a growth of 17.6 per cent during April to January 2010-11 over the corresponding period last year.
Indian economy expected to grow at 9 per cent with an outside band of +/- 0.25 per cent in 2011-12.
Average inflation expected lower next year and current account deficit smaller.

SUSTAINING GROWTH
Fiscal consolidation

Fiscal consolidation targets at Centre and States have shown positive effect on macro economic management of the economy.
Amendment to Centre’s FRBM Act, 2003 laying down the fiscal road map for the next five years to be introduced in the course of the year.
Proposal to introduce the Public Debt Management Agency of India Bill in the next financial year.

Tax Reforms

Direct Taxes Code (DTC) to be finalised for enactment during 2011-12. DTC proposed to be effective from April 1, 2012.
Areas of divergence with States on proposed Goods and Services Tax (GST) have been narrowed. As a step towards roll out of GST, Constitution Amendment Bill proposed to be introduced in this session of Parliament.
Significant progress in establishing GST Network (GSTN), which will serve as IT infrastructure for introduction of GST.

Expenditure Reforms

A Committee already set up by Planning Commission to look into the extant classification of public expenditure between plan, non-plan, revenue and capital.

Subsidies

Nutrient Based Subsidy (NBS) has improved the availability of fertiliser; Government actively considering extension of the NBS regime to cover urea.
Government to move towards direct transfer of cash subsidy to people living below poverty line in a phased manner for better delivery of kerosene, LPG and fertilisers. Task force set up to work out the modalities for the proposed system.

People’s ownership of PSUs

Overwhelming response to public issues of Central Public Sector Undertakings during current year.
Higher than anticipated non-tax revenue has led to reschedulement of some disinvestment issues planned for current year.
40,000 crore to be raised through disinvestment in 2011-12.
Government committed to retain at least 51 per cent ownership and management control of the Central Public Sector Undertakings.

INVESTMENT ENVIRONMENT
Foreign Direct Investment

Discussions underway to further liberalise the FDI policy.Foreign Institutional Investors
- SEBI registered mutual funds permitted to accept subscription from foreign investors who meet KYC requirements for equity schemes.
- To enhance flow of funds to infrastructure sector, the FII limit for investment in corporate bonds issued in infrastructure sector being raised.
Financial Sector Legislative Initiatives
- To take the process of financial sector reforms further, various legislations proposed in 2011-12.
- Amendments proposed to the Banking Regulation Act in the context of additional banking licences to private sector players.
Public Sector Bank Capitalisation
- 6,000 crore to be provided during 2011-12 to enable public sector banks to maintain a minimum of Tier I CRAR of 8 per cent.
Recapitalisation of Regional Rural Banks
- 500 crore to be provided to enable Regional Rural Banks to maintain a CRAR of at least 9 per cent as on March 31, 2012.
Micro Finance Institutions
- “India Microfinance Equity Fund” of ` 100 crore to be created with SIDBI. Government considering putting in place appropriate regulatory framework to protect the interest of small borrowers.
- “Women’s SHG’s Development Fund” to be created with a corpus of ` 500 crore.
Rural Infrastructure Development Fund
- Corpus of RIDF XVII to be raised from ` 16,000 crore to ` 18,000 crore.
Micro Small and Medium Enterprises
- 5,000 crore to be provided to SIDBI for refinancing incremental lending by banks to these enterprises.
- 3,000 crore to be provided to NABARD to provide support to handloom weaver co-operative societies which have become financially unviable due to non-repayment of debt by handloom weavers facing economic stress.
- Public sector banks to achieve a target of 15 per cent as outstanding loans to minority communities under priority sector lending at the earliest.
Housing Sector Finance
- Existing scheme of interest subvention of 1 per cent on housing loan further liberalised.
- Existing housing loan limit enhanced to ` 25 lakh for dwelling units under priority sector lending.
- Provision under Rural Housing Fund enhanced to ` 3,000 crore.
- To enhance credit worthiness of economically weaker sections and LIG households, a Mortgage Risk Guarantee Fund to be created under Rajiv Awas Yojana.
- Central Electronic Registry to prevent frauds involving multiple lending on the same immovable property to become operational by March 31, 2011.
Financial Sector Legislative Reforms Commission
- Financial Sector Legislative Reforms Commission set up to rewrite and streamline the financial sector laws, rules and regulations.
- Companies Bill to be introduced in the Lok Sabha during current session.
AGRICULTURE
- Removal of production and distribution bottlenecks for items like fruits and vegetables, milk, meat, poultry and fish to be the focus of attention this year.
- Allocation under Rashtriya Krishi Vikas Yojana (RKVY) increased from 6,755 crore to ` 7,860 crore.
Bringing Green Revolution to Eastern Region
- To improve rice based cropping system in this region, allocation of ` 400 crore has been made.
Integrated Development of 60,000 pulses villages in rainfed areas
- Allocation of ` 300 crore to promote 60,000 pulses villages in rainfed areas.
Promotion of Oil Palm
- Allocation of ` 300 crore to bring 60,000 hectares under oil palm plantations. Initiative to yield about 3 lakh Metric tonnes of palm oil annually in five years.
Initiative on Vegetable Clusters
- Allocation of ` 300 crore for implementation of vegetable initiative to provide quality vegetable at competitive prices.
Nutri-cereals
- Allocation of ` 300 crore to promote higher production of Bajra, Jowar, Ragi and other millets, which are highly nutritious and have several medicinal properties.
National Mission for Protein Supplement
- Allocation of ` 300 crore to promote animal based protein production through livestock development, dairy farming, piggery, goat rearing and fisheries.
Accelerated Fodder Development Programme
- Allocation of ` 300 crore for Accelerated Fodder Development Programme to benefit farmers in 25,000 villages.
National Mission for Sustainable Agriculture
- Government to promote organic farming methods, combining modern technology with traditional farming practices.
Agriculture Credit
- Credit flow for farmers raised from ` 3,75,000 crore to ` 4,75,000 crore in 2011-12.
- Interest subvention proposed to be enhanced from 2 per cent to 3 per cent for providing short-term crop loans to farmers who repay their crop loan on time.
- In view of enhanced target for flow of agriculture credit, capital base of NABARD to be strengthened by ` 3,000 crore in phased manner.
- 10,000 crore to be contributed to NABARD’s Short-term Rural Credit fund for 2011-12.
Mega Food Parks
- Approval being given to set up 15 more Mega Food Parks during 2011-12.
Storage Capacity and Cold Chains
- Augmentation of storage capacity through private entrepreneurs and warehousing corporations has been fast tracked.
- Capital investment in creation of modern storage capacity will be eligible for viability gap funding of the Finance Ministry.
Agriculture Produce Marketing Act
- In view of recent episode of inflation, need for State Governments to review and enforce a reformed Agriculture Produce Marketing Act.
Infrastructure and Industry
- Allocation of ` 2,14,000 crore for infrastructure in 2011-12. This is an increase of 23.3 per cent over 2010-11. This also amounts to 48.5 per cent of total plan allocation.
- Government to come up with a comprehensive policy for further developing PPP projects.
- IIFCL to achieve cummulative disbursement target of ` 20,000 crore by March 31, 2011 and ` 25,000 crore by March 31, 2012.
- Under take out financing scheme, seven projects sanctioned with debt of ` 1,500 crore. Another ` 5,000 crore will be sanctioned during 2011-12.
- To boost infrastructure development, tax free bonds of ` 30,000 crore proposed to be issued by Government undertakings during 2011-12.
National Manufacturing Policy
- Share of manufacturing in GDP expected to grow from about 16 per cent to 25 per cent over a period of 10 years. Government will come out with a manufacturing policy.
- Two Committees set up for greater transparency and accountability in procurement policy; and for allocation, pricing and utilisation of natural resources.
- Issues relating to reconciliation of environmental concern from various departmental activities including those related to infrastructure and mining to be considered by a Group of Ministers.
- National Mission for hybrid and electric vehicle to be launched.
- Financial Assistance to be made available for metro projects in Delhi, Mumbai, Bengaluru, Kolkata and Chennai.
- Capital investment in fertiliser production proposed to be included as an infrastructure sub-sector.
Exports
- Of 23 suggestions made by Task Force on Transaction Cost, constituted by the Department of Commerce, 21 suggestions already implemented. Action to be taken on the remaining two suggestions. Transaction Cost of ` 2,100 crore will thus be mitigated.
- Self assessment to be introduced in Customs to modernize the Customs administration.
- Proposal to introduce scheme for refund of taxes paid on services used for export of goods.
- Mega Cluster Scheme to be extended for leather products. Seven mega leather clusters to be set up during 2011-12.
- Jodhpur to be included for the development of a handicraft mega cluster.
BLACK MONEY
- Five fold strategy to be put into operation to deal with the problem of generation and circulation of black money.
- Membership of various international fora engaged in anti money laundering, Financial integrity and Economic development, Exchange of information for tax purposes and transparency, secured.
- Various Tax Information Exchange Agreements (TIEA) and Double Taxation Avoidance Agreements (DTAA) concluded. Foreign Tax Division of CBDT has been strengthened to effectively handle increase in tax information exchange and transfer pricing issues.
- Enforcement Directorate strengthened three fold to handle increased number of cases registered under amended Money Laundering Legislation.
- Finance Ministry has commissioned study on unaccounted income and wealth held within and outside the country.
- Comprehensive national policy to be announced in near future to strengthen controls over prevention of trafficking on narcotic drugs.
STRENGTHENING INCLUSION
- National Food Security Bill (NFSB) to be introduced in the Parliament during the course of this year.
- Allocation for social sector in 2011-12 (` 1,60,887 crore) increased by 17 per cent over current year. It amounts to 36.4 per cent of total plan allocation.
Bharat Nirman
- Allocation for Bharat Nirman programme proposed to be increased by ` 10,000 crore from the current year to ` 58,000 crore in 2011-12.
- Plan to provide Rural Broadband Connectivity to all 2,50,000 Panchayats in the country in three years.
MGNREGA
- In pursuance of last years budget announcement to provide a real wage of ` 100 per day, the Government has decided to index the wage rates notified under the MGNREGA to the Consumer Price Index for Agricultural Labour. The enhanced wage rates have been notified by the Ministry of Rural Development on January 14, 2011.
- From 1st April, 2011, remuneration of Anganwadi workers increased from ` 1,500 per month to ` 3,000 per month and for Anganwadi helpers from ` 750 per month to ` 1,500 per month.
Scheduled Castes and Tribal Sub-plan
- Specific allocation earmarked towards Schedule Castes Sub-plan and Tribal Sub-plan in the Budget.
- Allocation for primitive Tribal groups increased from ` 185 crore in 2010-11 to ` 244 crore in 2011-12.
Education
- Allocation for education increased by 24 per cent over current year.
Sarva Shiksha Abhiyan
- 21,000 crore allocated, which is 40 per cent higher than Budget for 2010-11.
- Pre-matric scholarship scheme to be introduced for needy SC/ST students studying in classes IX and X.
National Knowledge Network
- Connectivity to all 1,500 institutions of Higher Learning and Research through optical fiber backbone to be provided by March, 2012.
Innovations
- National Innovation Council set up to prepare road map for innovations in India.
- Special grant provided to various universities and academic institutions to recognise excellence.
Skill Development
- Additional ` 500 crore proposed to be provided for National Skill Development Fund during the next year.
- An international award with prize money of ` 1 crore being instituted for promoting values of universal brotherhood as part of National celebrations of 150th Birth Anniversary of Gurudev Rabindranath Tagore.
Health
- Plan allocations for health stepped-up by 20 per cent.
- Scope of Rashtriya Swasthya Bima Yojana to be expanded to widen the coverage.
Financial Inclusion
- Target of providing banking facilities to all 73,000 habitations having a population of over 2,000 to be completed during 2011-2012.
Unorganised sector
- Exit norms under co-contributory pension scheme “Swavalamban” to be relaxed. Benefit of Government contribution to be extended from three to five years for all subscribers who enroll during 2010-11 and 2011-12.
- Eligibility for pension under Indira Gandhi National Old Age Pension Scheme for BPL beneficiaries reduced from 65 years of age to 60 years. Those above 80 years of age will get pension of ` 500 per month instead of ` 200 at present.
Environment and Climate Change
Forests
- 200 crore proposed to be allocated for Green India Mission from National
Clean Energy Fund.
Environmental Management
- 200 crore proposed to be allocated for launching Environmental Remediation Programmes from National Clean Energy Fund.
Cleaning of Rivers and Lakes
- Special allocation of ` 200 crore proposed to be provided for clean-up of some more important lakes and rivers other than Ganga.
Some Other Initiatives
- To boost development in North Eastern Region and Special Category States, allocation for Special Assistance doubled.
- 8,000 crore provided in current year for development needs of Jammu and Kashmir.
- Allocation made in 2011-12 to meet the infrastructure needs for Ladakh (` 100 crore) and Jammu region (` 150 crore).
- Allocation under Backward Regions Grant Fund increased by over 35 per cent.
- Funds allocated under Integrated Action Plan (IAP) for addressing problems related to Left Wing extremism affected districts. 60 selected Tribal and backward districts provided with 100 per cent block grant of ` 25 crore and ` 30 crore per district during 2010-11 and 2011-12 respectively.
- A lump-sum ex-gratia compensation of ` 9 lakh for 100 per cent disability to be granted for personnel of Defence and Para Military forces discharged from service on medical ground on account of disability attributable to government service.
- Provision of ` 1,64,415 crore, including ` 69,199 crore for capital expenditure to be made for Defence Services in 2011-12.
- To build judicial infrastructure, plan provision for Department of Justice increased by three fold to ` 1,000 crore.
Census 2011
- To enumerate castes other than Schedule Castes and Schedule Tribes in Census 2011, ‘caste’ to be canvassed as a separate time bound exercise.
IMPROVING GOVERNANCE

UID Mission
- From 1st October, 2011 ten lakh Aadhaar numbers will be generated per day.
IT Initiatives
- Various IT initiatives taken for efficient tax administration. These include e-filing and e-payment of taxes, adoption of ‘Sevottam’ concept by CBEC and CBDT, web based facility for tax payers to track the resolution of refunds and credit for pre-paid taxes and augmentation of processing capacity.
- Under Mission mode projects, funds released to 31 projects received from States/UTs for computerisation of Commercial taxes. This will allow States to align with roll out of GST.
- Bill to amend the Indian Stamp Act proposed to be introduced shortly.
- A new scheme with an outlay of ` 300 crore to be launched to provide assistance to States to modernise their stamp and registration administration and roll out e-stamping in all the districts in the next three years.
- A new simplified form ‘Sugam’ to be introduced to reduce the compliance burden of small tax payers falling within presumptive taxation.
- Three more benches of Settlement Commission to be set up to fast track the disposal of cases.
- Steps initiated to reduce litigation and focus attention on high revenue cases.
Corruption
- Group of Ministers constituted to consider measures for tackling corruption.
- Recommendations to be made in a time bound manner.
- Performance Monitoring and Evaluation System
- In pursuance of recommendations of Second Administrative Reforms Commission, 62 departments covered under Performance Monitoring and Evaluation System (PMES) to assess their effectiveness.
TAGUP
- Recommendations of Technology Advisory Group for Unique Projects (TAGUP) submitted and accepted in principle.
BUDGET ESTIMATES 2011-12
- Gross Tax receipts are estimated at ` 9,32,440 crore.
- Non-tax revenue receipts estimated at ` 1,25,435 crore.
- Total expenditure proposed at ` 12,57,729 crore.
- Increase of 18.3 per cent in total Plan allocation.
- Increase of 10.9 per cent in the Non-plan expenditure.
- XI Plan expenditure more than 100 per cent in nominal terms than envisaged for the Plan period.
- Increase of 23 per cent in Plan and Non-plan transfer to States and UTs.
- Fiscal Deficit brought down from 5.5 per cent in BE 2010-11 to 5.1 per cent of GDP in RE 2010-11.
- Fiscal Deficit kept at 4.6 per cent of GDP for 2011-12.
- Fiscal Deficit to be progressively reduced to 3.5 per cent by 2013-14.
- “Effective Revenue Deficit” estimated at 2.3 per cent of GDP in the Revised
Estimates for 2010-11 and 1.8 per cent for 2011-12.
- All subsidy related liabilities brought into fiscal accounting.
- Net market borrowing of the Government through dated securities in 2011-12 would be ` 3.43 lakh crore.
- Central Government debt estimated at 44.2 per cent of GDP for 2011-12 as against 52.5 per cent recommened by the 13th Finance Commission.
PART B TAX PROPOSALS

Direct Taxes
- Exemption limit for the general category of individual taxpayers enhanced from ` 1,60,000 to ` 1,80,000 giving uniform tax relief of ` 2,000.
- Exemption limit enhanced and qualifying age reduced for senior citizens.
- Higher exemption limit for Very Senior Citizens, who are 80 years or above.
- Current surcharge of 7.5 per cent on domestic companies proposed to be reduced to 5 per cent.
- Rate of Minimum Alternative Tax proposed to be increased from 18 per cent to 18.5 per cent of book profits.
- Tax incentives extended to attract foreign funds for financing of infrastructure.
- Additional deduction of ` 20,000 for investment in long-term infrastructure bonds proposed to be extended for one more year.
- Lower rate of 15 per cent tax on dividends received by an Indian company from its foreign subsidiary.
- Benefit of investment linked deduction extended to businesses engaged in the production of fertilisers.
- Investment linked deduction to businesses developing affordable housing.
- Weighted deduction on payments made to National Laboratories, Universities and Institutes of Technology to be enhanced to 200 per cent.
- System of collection of information from foreign tax jurisdictions to be strengthened.
- A net revenue loss of ` 11,500 crore estimated as a result of proposals.
Indirect Taxes
- To stay on course for transition to GST.
- Central Excise Duty to be maintained at standard rate of 10 per cent.
- Reduction in number of exemptions in Central Excise rate structure.
- Nominal Central Excise Duty of 1 per cent imposed on 130 items entering in the tax net.
- Lower rate of Central Excise Duty enhanced from 4 per cent to 5 per cent.
- Optional levy on branded garments or made up proposed to be converted into a mandatory levy at unified rate of 10 per cent.
- Peak rate of Custom Duty held at its current level.
Agriculture and Related Sectors
- Scope of exemptions from Excise Duty enlarged to include equipments needed for storage and warehouse facilities on agricultural produce.
- Basic Custom Duty reduced for specified agricultural machinery from 5 per cent to 2.5 per cent.
- Basic Custom Duty reduced on micro-irrigation equipment from 7.5 per cent to 5 per cent.
- De-oiled rice bran cake to be fully exempted from basic Custom Duty. Export Duty of 10 per cent to be levied on its export.
Manufacturing Sector
- Basic Custom Duty reduced for various items to encourage domestic value addition vis-à-vis imports, to remove duty inversion and anomalies and to provide a level playing field to the domestic industry.
- Rate of Export Duty for all types of iron ore enhanced and unified at 20 per cent ad valorem. Full exemption from Export Duty to iron ore pellets.
- Basic Custom Duty on two critical raw materials of cement industry viz. petcoke and gypsum is proposed to be reduced to 2.5 per cent.
- Cash dispensers fully exempt from basic Customs Duty.
Environment
- Full exemption from basic Customs Duty and a concessional rate of Central Excise Duty extended to batteries imported by manufacturers of electrical vehicles.
- Concessional Excise Duty of 10 per cent to vehicles based on Fuel cell technology.
- Exemption granted from basic custom duty and special CVD to critical parts/assemblies needed for Hybrid vehicles.
- Reduction in Excise Duty on kits used for conversion of fossil fuel vehicles into Hybrid vehicles.
- Excise Duty on LEDs reduced to 5 per cent and special CVD being fully exempted.
- Basic Customs Duty on solar lantern reduced from 10 to 5 per cent.
- Full exemption from basic Customs Duty to Crude Palm Stearin used in manufacture of laundry soap.
- Full exemption from basic Excise Duty granted to enzyme based preparation for pre-tanning.
Infrastructure
- Parallel Excise Duty exemption for domestic suppliers producing capital goods needed for expansion of existing mega or ultra mega power projects.
- Full exemption from basic Customs Duty to bio-asphalt and specified machinery for application in the construction of national highways.
Other Proposals
- Scope of exemptions from basic Customs Duty for work of art and antiquities extended to apply for exhibition or display in private art galleries open to the general public.
- Exemption from Import Duty for spares and capital goods required for ship repair units extended to import by ship owners.
- Concessional basic Custom Duty of 5 per cent and CVD of 5 per cent available to newspaper establishments for high speed printing presses extended to mailroom equipment.
- Jumbo rolls of cinematographic film fully exempted from CVD by providing full exemption from Excise Duty.
- Out right concession to factory-built ambulances from Excise Duty.
- Relief measures proposed for raw pistachio, bamboo for agarbatti, lactose for the manufacture of homoeopathic medicines, sanitary napkins, baby and adult diapers.
- Proposals relating to Customs and Central Excise estimated to result in a net revenue gain of ` 7,300 crore.
Service Tax
- Standard rate of Service Tax retained at 10 per cent, while seeking a closer fit between present regime and its GST successor.
- Hotel accommodation in excess of ` 1,000 per day and service provided by air conditioned restaurants that have license to serve liquor added as new services for levying Service Tax.
- Tax on all services provided by hospitals with 25 or more beds with facility of central air conditioning.
- Service Tax on air travel both domestic and international raised.
- Services provided by life insurance companies in the area of investment and some more legal services proposed to be brought into tax net.
- All individual and sole proprietor tax payers with a turn over upto ` 60 lakh freed from the formalities of audit.
- To encourage voluntary compliance the penal provision for Service Tax are being rationalised. Similar changes being carried out in Central Excise and Custom laws.
- Proposals relating to Service Tax estimated to result in net revenue gain of 4,000 crore.
- Proposals relating to Direct Taxes estimated to result in a revenue loss of 11,500 crore and those related to Indirect Taxes estimated to result in net revenue gain of ` 11,300 crore.
Source : http://indiabudget.nic.in/index.asp

FUTURE GROUP TO GO WHOLESALE IN RURAL INDIA

noreply@blogger.com (Unknown) — Thu, 10 Feb 2011 13:40:00 +0000

The Kishore Biyani led Future Group with successful urban retail chains such as Big Bazaar and Pantaloons is now planning to capture the rural markets of India through the wholesale route.

The group made it’s first foray into rural retail by taking over the Godrej run Adhar Retail chain of stores in 2008. Adhar Retail now currently operates 51 stores in Maharashtra, Gujarat , Punjab and Haryana. Future Group is now planning to open 50 wholesale stores in the next four year. These wholesale stores will be based in district headquarters and operate through 300 franchises each. The process of enrolling village franchises has already started through Adhar .

It is planned to enlist 20,000 franchisee outlets in villages that would be serviced by the wholesale stores.

MN01211

INDIAN ECONOMY TO GROW AT 8.6%

noreply@blogger.com (Unknown) — Wed, 09 Feb 2011 03:40:00 +0000

According to data released by the Central Statistics Office, the India economy is set to grow by 8.6 % in 2010-11. The growth figures for 2009-10 were 8%.
The farm sector has particularly shown a robust increas which stands at 5.4% in the current fiscal. This is against the growth of 0.4% in the previous year. Services sector growth is expected to be 9.6% and manufacturing sector at 8.8%.

Per capita income this year is estimated to grow by 17.3% and at current prices is estimated at US$ 1203.3 ( Rs 54148).

NEW CONSUMER PRICE INDEX

noreply@blogger.com (Unknown) — Tue, 08 Feb 2011 05:45:00 +0000

The Government has unveiled a National Consumer Price Index which reflects the changing lifestyles of both rural and urban consumers. The new CPI incorporates the price of serveral key services including telephone bills, education and recreation. According to the Government, the new CPI for rural, urban and combined will be released in February.

The highest share of wallet being food is common for both the urban and rural consumers - though a rural consumers spends more than 50% of his income on food. Medical care and Fuel & Lighting also take a higher proportion of the rural consumer's wallet.

FMCG RURAL DEMAND TO SHOW 50% GROWTH IN 2012

noreply@blogger.com (Unknown) — Fri, 07 Jan 2011 12:53:00 +0000

In a Press Release on January 3, 2010 , The Associated Chambers of Commerce and Industry in India ( ASSOCHAM) have forecasted an extremely robust growth in the FMCG sector. The Press Release is detailed below

Fast Moving Consumer Goods (FMCG) will be witnessing more than 50% of growth in its Rural and Semi-Urban Segments by 2012 which in totality is projected to grow at an CAGR of 10% to carry forward its market size to over Rs.1,06300 crore from present level of Rs. 87,900 crore, according to an analysis carried out by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

The growing penchant and insatiable appetite of rural and semi-urban folks for FMCG products will mainly be responsible for this development as their manufacturers will have to deepen their concentration for higher sales volumes in such niche areas.

Also, the urban population will develop a larger craze for organic products in the FMCG sector from health point of view and as their will not be a large number of products of organic nature in the FMCG sector, this industry will have to look for larger market size in the rural and semi-urban areas, says the Chamber’s analysis.

In the rural and semi-urban areas, FMCG market penetration is currently about 2% in general as against its total growth rate of about 8%, said ASSOCHAM President, Mr. Dilip Modi while commenting on the Analysis on FMCG Rural and Semi-Urban Prospects.

Mr. Modi said the Indian rural market with its vast size and demand base offered a huge opportunity that FMCG companies cannot afford to ignore. With 150 million households, the rural population is nearly three times the urban.

ASSOCHAM Chief said that the FMCG products which will attract the eyes of rural and semi-urban folks will mainly comprise soaps, detergents, cold drinks, consumer durables, toothpastes, batteries, biscuits, namkeens, mosquito repellants, refined oil, and hair oil. In the semi-urban areas which will include townships of larger sizes, the Chamber estimates, a good number of malls will have been put up in the next 2-3 years which will sell large volumes of FMCG products and thereby increase their demand phenomenally.

Though the rural and semi-urban demand of FMCG products will grow larger and higher, it will put a severe pressure on the margins of manufacturers of FMCG products because of cut-throat competition, says the Chamber analysis. The branded companies in the FMCG sector that will make killings will include a known number like Nirma, HLL, Dabur, ITC, Godrej, Britannia, Coca-Cola, Pepsi etc.

The rising rural and semi-urban income levels coupled with massive advertisement of FMCG products in the electronic media will spread so much of awakening in the rural and semi-urban folks towards fast moving consumer goods products so much that these will enlarge their affordability for them.

ASSOCHAM has therefore suggested that to tap the rural and semi-urban market, better infrastructure facilities like roads, better telecom connectivity to rural persons, proper sanitation and healthcare facilities should be created.

ADVERTISING THIS WEEK BY RETAILERS

noreply@blogger.com (Unknown) — Sun, 05 Dec 2010 12:39:00 +0000

This festive season saw customers splurging and all retailers showed increased revenue incomes as well as growth in same store sales. There has been a lull both in retailer advertising activity as well as consumer buying for the last 2 weeks of Novmber. Retailers, realising that customers need to be pulled back into stores have once again eimbarked on an aggressive advertising blitz.

Big Bazaar has launched a full page ad campaign with ' Monthly Bachat Bazaar' as the theme and prices and quality being the focus areas and special attention being given to prices, free offers on detergents and fmcg products.

Reliance too has launched an aggressive ad campaign with full page ads in the national dailies. The Theme - 'Winter Wonders' . Focus here too is on price and the difference between MRP and Reliance prices. Also highlighted are what they call the 'Stars of the week'. Let's see how customer's see these products and their prices.

Pantaloons this week launched their 50th store with ' The ultimate Fashion Experience'.

SRS value bazaar has declared December as the Maha Bachat Month. The focus here too is on prices and the offers - price offs, combos, bulk discounts etc etc.

Home Town is focusing on Bathrooms and ending their special offers this week with this closing ad.

Reliance Digital in an effort to arrest the declining sales in electronics has declared an end of season sale with so called special prices and bargains.

The Mahendra Group retail venture - Mom & Me have launched their hunt for child stars for their forthcoming camgaigs by inviting kids to be photographed and selected.

Vishal continues with it's rationing theme. The focus - apparel, glass & crockery and other home products.

It would be interesting to watch how retailers perfom in the month of December. November was a hugely successful month for everyone and consumer sentiment indicates that December should auger well for everyone.

MONTHLY ECONOMIC REPORT – MINISTRY OF FINANCE

noreply@blogger.com (Unknown) — Mon, 29 Nov 2010 04:08:00 +0000

Issued by the Ministry of Finance, Goverment of India.

MONTHLY ECONOMIC REPORT - OCTOBER 2010