Boston, MA -- (SBWIRE) -- 06/25/2012 -- Heightened consumer price sensitivity will remain a dominant theme in India over the coming quarters, with tight credit conditions and declining asset prices providing little respite for consumer confidence and purchasing power. While inflation put a major dampener on private consumption activity in 2011, moderating price pressure in recent months means that it is no longer a major concern to our near-term consumer outlook. Looking ahead, the consumer-facing sectors in India are showing long-term promise, but a relatively hostile investment climate is likely to keep less-hardy investors at bay in the near future. Reflecting the lack of policy continuity and stability in India, the government recently backtracked on its decision to allow foreign direct investment in its multi-brand retail sector. Given the lack of assurance that the government's proposed policies will be followed through and implemented successfully, this will certainly discourage foreign investors from committing massive sums of capital expenditures in the market.

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Headline Industry Forecasts (local currency)

- 2012 food consumption growth = +5.4%; compound annual growth rate (CAGR) 2011-2016 = +6.5%
- 2012 alcoholic drink value sales growth = +13.7%; CAGR to 2016 = +13.4%
- 2012 soft drink value sales growth = +18.2 %; CAGR to 2016 = +16.3%
- 2012 mass grocery retail sales = +18.8%; CAGR to 2016 = +11.9%

Key Company Trends

On-Hold Reform An Unwelcome Signal For Foreign Investors: In a step towards greater market liberalisation, the government announced in late November that it would allow up to 51% foreign direct investment in multi-brand retail. However, this proposal was faced with vehement opposition from both inside and outside the ruling United Progressive Alliance, forcing Prime Minister Manmohan Singh's administration to put on hold its plans to open up its retail market to foreign investors. What is particularly worrying is that this move has sent out a negative message to foreign investors about the lack of stability in the country's policymaking process. As a case in point, UK retailer Tesco has postponed plans to invest INR5bn (US$96mn) to set up wholesale stores in India, ostensibly owing to its concerns pertaining to future retail policy implementation in the country.

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. Representing the world's top research publishers and analysts, we provide quick and easy access to the best competitive intelligence available. Our unbiased, expert staff will help you find the right research to fit your requirements and your budget. For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156.

Browse all Food research reports at Fast Market Research

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Heightened consumer price sensitivity will remain a dominant theme in India over the coming quarters, with tight credit conditions and declining asset prices providing little respite for consumer confidence and purchasing power. While inflation put a major dampener on private consumption activity in 2011, moderating price pressure in recent months means that it is no longer a major concern to our near-term consumer outlook. Looking ahead, the consumer-facing sectors in India are showing long-term promise, but a relatively hostile investment climate is likely to keep less-hardy investors at bay in the near future. Reflecting the lack of policy continuity and stability in India, the government recently backtracked on its decision to allow foreign direct investment in its multi-brand retail sector. Given the lack of assurance that the government's proposed policies will be followed through and implemented successfully, this will certainly discourage foreign investors from committing massive sums of capital expenditures in the market.

View Full Report Details and Table of Contents

Headline Industry Forecasts (local currency)

- 2012 food consumption growth = +5.4%; compound annual growth rate (CAGR) 2011-2016 = +6.5%
- 2012 alcoholic drink value sales growth = +13.7%; CAGR to 2016 = +13.4%
- 2012 soft drink value sales growth = +18.2 %; CAGR to 2016 = +16.3%
- 2012 mass grocery retail sales = +18.8%; CAGR to 2016 = +11.9%

Key Company Trends

On-Hold Reform An Unwelcome Signal For Foreign Investors: In a step towards greater market liberalisation, the government announced in late November that it would allow up to 51% foreign direct investment in multi-brand retail. However, this proposal was faced with vehement opposition from both inside and outside the ruling United Progressive Alliance, forcing Prime Minister Manmohan Singh's administration to put on hold its plans to open up its retail market to foreign investors. What is particularly worrying is that this move has sent out a negative message to foreign investors about the lack of stability in the country's policymaking process. As a case in point, UK retailer Tesco has postponed plans to invest INR5bn (US$96mn) to set up wholesale stores in India, ostensibly owing to its concerns pertaining to future retail policy implementation in the country.

About Fast Market Research
Fast Market Research is an online aggregator and distributor of market research and business information. Representing the world's top research publishers and analysts, we provide quick and easy access to the best competitive intelligence available. Our unbiased, expert staff will help you find the right research to fit your requirements and your budget. For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156.

Browse all Food research reports at Fast Market Research

You may also be interested in these related reports:

- Central America Food and Drink Report Q2 2012
- France Food & Drink Report Q2 2012
- Ireland Food & Drink Report Q2 2012
- Australia Food & Drink Report Q2 2012
- Hungary Food & Drink Report Q2 2012
- Colombia Food & Drink Report Q2 2012
- Egypt Food & Drink Report Q2 2012
- China Food & Drink Report Q2 2012
- Slovenia Food & Drink Report Q2 2012
- Brazil Food & Drink Report Q2 2012