Traders are slowly coming around to the fact that India is opening up its retail sector to allow the Walmarts ( WMT , quote ) and Carrefours ( CRRFY , quote ) of the world access to over 1 billion relatively untouched consumers.
Giving the giants a welcoming mat will definitely improve the efficiency of Indian retail and may even help keep food inflation in check. After all, logistics, warehousing and distribution are key to controlling prices and avoiding shortages.
We are excited but cautious. In Russia, the big retailers are not locked out, but still cannot the get critical mass they need to execute on their scale.
In India, foreign direct investment in multi-branded stores has been prohibited, effectively locking up the entire market.
Fans of Trading the Globe should already know Ron Shah as a top India expert and a good guy. Here's what he tells me:
Liberalization of the retail sector is an absolute game changer. It will lead to tremendous consolidation amongst existing retailers, increased price competitiveness and long term impact on inflation and currency. The development will also positively impact infrastructure improvements in India, and other supply-side aspects of the economy. However, we expect there to be some significant hurdles before this change will be completed.
For now, we wait and see, but this is great outside-the-box thinking from Delhi, and could eventually give the broad market ( INDY , quote ) a lift as well.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.