India Insight

Liquor retailers toast online model in India

When Dhruv Khandelwal started working as an equity research analyst after finishing his MBA in the United States, he wanted to start an Indian financial services website. That changed when Khandelwal and his friends ran out of beer on a Sunday afternoon.

Letsbuydrink.com, a website launched by Khandelwal six months ago, offers imported alcoholic beverages for sale in India. The website has 2,000 registered members and averages monthly sales of 150,000 rupees ($2,460).

“It’s just a point of convenience for (customers) and that’s the target market,” said 29-year-old Khandelwal. “This is an industry where you need to build a brand image and you have to build confidence.”

Entrepreneurs and liquor vendors in India are betting on the online model to win more customers, while making it easier for people to order their favourite brands of beer or wine on the Internet.

With a $35 billion retail market that is growing at around 8 percent each year, India is the third-largest and one of the fastest-growing liquor markets in the world, according to Bangalore-based investment bank IndigoEdge.

India and the art of the 24-hour economic reform

It’s not every day that India makes such a dramatic move as raising diesel prices, or allowing foreign direct investment in its debt-walloped passenger airlines. It’s certainly not every day that it caps this 24-hour period by allowing foreign investment in retail businesses.

In short, big international companies like Wal-Mart will be able to start their own shops in India, or will be able to buy up to 51 percent of existing retail businesses. This could affect small grocery stores like Nilgiris in southern India all the way down to local street vendors.

The Indian government made all these moves as part of increasingly urgent efforts to firm up its sagging economy. While the diesel price rise of 5 rupees a litre and the retail moves are sure to cause a lot of anger and pain on the part of many Indians, the government has suddenly revealed a desire to think about the collective future of the country.

from Global Investing:

Retail volte face confirms India as BRIC that disappoints

Jim O'Neill, the Goldman Sachs banker who coined the term BRICs to capture the fast-growing emerging-markets quartet of Brazil, Russia, India and China,  has fingered India as the BRIC that has disappointed the most over the past decade in terms of reforms, FDI and productivity. New Delhi's latest decision to put on hold a landmark reform of its retail sector will only confirm this view.

The government's backtracking on plans to allow foreign investment in supermarkets will not surprise those accustomed to New Delhi's record on key economic reforms. But it means India's weak performance on FDI receipts will continue and that's bad news for the worsening balance of payments deficit.  Speaking of the retail volte face, O'Neill said: "They shouldn’t raise people's hopes of FDI and then in a week, say, 'we’re only joking'".

Various Indian lobby groups that oppose the reforms contend that foreign giants such as Wal-Mart and Tesco will kill off the livelihoods of millions of small traders.

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