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The Textile Magazine
DECEMBER 2011
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85
FDI
in
Retail
market share, the organized sector
is estimated to have 736 million sq.
ft. of non-food retail space.
l
Thus, organized retail will have
a maximum of 783.63 million sq.
ft. (47.63 + 736.00).
l
At one direct job for every 180
sq. ft. of retail space, 4.354 million
people will be employed across the
783.63 million sq. ft. of space oc-
cupied by organized retail. With
1.5 indirect jobs (in supply chain
and logistics) per direct job, it adds
up to a total of 10.89 million jobs.
l
A vast majority of the employ-
ees will be primary school drop-
outs. Organized retailers will give
them benefits such as PF, ESI and
insurance, and hone their skills
through training & development.
What does the kirana do to increase
India’s Human Development In-
dex? So, FDI = HDI.
l
Why would any political party
want to favour 19,850 small busi-
nessmen over 10.89 million youth
who don’t have many other other
job opportunities?
l
At estimated sales of Rs. 2,000
per sq. ft. per month in 2015, the
783.63 million sq. ft. of organized
retail space will generate revenues
of Rs. 18.807 trillion per annum
and taxable profits of Rs. 564 bil-
lion (assumed at only three per cent
of revenues).
l
This translates to Rs. 2.594 tril-
lion in GST collections (@ 16 per
cent GST) and Rs. 174.28 billion in
corporate income-tax. The Govern-
ment is losing a minimum 50 per
cent of this potential tax revenue
because half of the business of the
unorganized retail trade is probably
escaping the tax net.
l
The organized sector will have
780,000 managers earning average
taxable salary of Rs. 1 million per
annum. This will generate at least
Rs. 195 billion of additional per-
sonal income-tax collections.
l
The total Rs. 1576 billion in ad-
ditional tax collections (Rs. 1294
billion in GST [50 per cent of to-
tal] + Rs. 87 billion in corporate
income-tax [50 per cent of total]
+ Rs. 195 billion in personal in-
come-tax) translates to an increase
of more than 11 per cent in the tax
collection of the Centre and States,
wiping out the revenue deficit and
making India a revenue surplus
economy.
l
Of the 783.63 million sq. ft. of
organized retail space, about 103.9
million sq. ft. already exists. So
we are talking about 680 million
sq. ft. to be added a new. This will
need infrastructure investments of
Rs. 4.76 trillion (at an average Rs.
7000 per sq. ft. at 2012-2015 costs,
for building construction, interiors
and shop fit-ins) and Rs. 1.904 tril-
lion in inventories (@ Rs. 2800 per
sq. ft.), or a total investment of Rs.
6.664 trillion ($128 billion).
l
If 50 per cent of this is foreign
investment (by foreign retailers as
well as financial investors), we are
talking about FDI of $64 billion in
four years, or $16 billion per an-
num, 80 per cent increase over the
actual inflows of fiscal 2010-11.
This will help the rupee to bounce
back.
l
Most importantly, about $180
billion will get converted from the
black market economy to the ac-
countable economy, and we may
need a much smaller Lokpal au-
thority.
Asipac undertakes strategic re-
search on retail and retail real es-
tate sectors. In retail real estate, it
has provided development strategy,
planning and lease management on
retail/shopping centre projects of
more than 17 million sq. ft., includ-
ing seven of the 15 largest shop-
ping centres in India.
The company has leased more
than 8.5 million sq. ft. of retail
real estate in south India alone in
just six years. It has current leasing
mandates for nine malls in five cit-
ies.
w