Expectations of an economic turnaround were belied with GDP growth slowing down to about 4.7% for FY 2013–14, marking it as the second straight year with below-5% growth. Agriculture grew at 6.3% q-o-q, while manufacturing growth dipped to a low of about 1.4% q-o-q. A persistent global economic slowdown hemmed in India’s exports sector as well, further hindering growth prospects.
A bright streak, however, was the emergence of a stable political dispensation at the center, with a propensity to welcome investments and usher in economic reforms. For the Union Budget lined up later in July, the new government is aiming at relaxing FDI guidelines, providing clarity on tax reforms, supporting industrial growth, and aiming at large scale infrastructure creation. The central bank also took cues from the altered political environment and maintained status quo in its latest monetary policy review in May, while cutting the SLR by 50 bps and releasing funds worth INR 39,000 crore into the market. It is widely expected that the new government shall soon allow the entry of REITs as investment vehicles, permit 100% FDI in e-commerce and infrastructure, while providing tax incentives to the realty sector at large.
The retail market attracted stable demand—mostly driven by retailers from the fashion and apparel, F&B, fashion accessories, and electronics segments, which continued to strengthen their footprint across cities during the month. High street locations persisted to see healthy leasing activity; while limited space availability led to restricted retail activity in prominent mall developments across most leading cities. The number of new retail entrants remained low during the month of May; and rental values continued to remain stable in most high streets and organized mall clusters across the country.
Retailers such as Metro AG had already announced their plans to go ahead with the cash-and-carry model in India. Additionally, Truefitt and Hill (salons) will soon commence its Indian operations; while Sternhagen (premium-brand for sanitary ware) plans to open flagship stores across Delhi, Chandigarh and Ludhiana, followed by Mumbai and Bengaluru.
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