ITC Chairman YC Deveshwar backs FDI in retail, says India needs more investments

ITC Group Chairman Y C Deveshwar on Saturday said the government's decision to allow foreign direct investment (FDI) in multi-brand retail would "revive the sentiment" and bring out the "animal spirits".

The government on Friday allowed 51 per cent foreign investment in multi-brand retail but left it to the states to permit global retailers to open stores.

"Seeing is believing and you can see it. I think we need more investments. Firstly, I think we need to reverse the sentiment that is at the moment in low gear", Deveshwar said.



The ITC chairman and top company officials were in Chennai on Saturday to inaugurate their Rs 1,200 crore ultra-luxury property - the ITC Grand Chola, spread across a whopping 1.5 million square foot, comprising 600 rooms. Chief Minister J Jayalalithaa inagurated the hotel.

"Hopefully, this (initiative) will revive the sentiment and bring out the animal spirits. Basically, no one single action can do this", he said.

Deveshwar said the economy grows on sentiment.

"If it (allowing FDI in multi-brand retail) helps to revive the sentiment, then it will be a great thing for the Indian economy".

On the Rs 5 per litre hike in diesel prices, Deveshwar termed it as a "macro-economic management" and observed that "one cannot have a growing deficit since it leads to inflation."

"I am not an economist. It is a matter of macro-economic management . Obviously, if people do not pay for their commodity, then people will consume it more. So, whatever you import, if its expensive and if the prices are high, then you should let the price pass through, so that people are careful", he said.

Asked about their future plans, Deveshwar did not rule out entering several sectors in which his company does not have a presence.

"Sooner or later, we may be in coffee, milk-based products, We can be in health drinks. But that will be in sequence. We will be there, but not tomorrow. It has to take its sequence," he said.

As part of expanding its hotel business, the Group has lined up investments of Rs 25,000 crore over the next five years.

"We have huge investments coming up on hotel business. We have a land in Sri Lanka. It will have our first overseas venture (for ITC Group) on ultra luxury," Deveshwar said.

Stating the group's hotel business was growing at a fast pace, he said the company "also has a presence in Nepal".

Besides these properties in Nepal and Sri Lanka, the Group is eyeing entering Bangladesh and other neighbouring countries.

ITC Group Director-In Charge Nakul Anand said currently the group has about 8,000 rooms and plans to add another 5,000 rooms in the next three to four years by setting up properties in Ahmedabad, Amritsar, Bhubaneshwar and Coimbatore.

These expansion plans will attract investments of $2 billion (over Rs 10,000 crore) of which 35-40 per cent have been already utilised, he said.

On ITC's FMCG business, Deveshwar said the group expects to garner revenues of Rs 15,000 crore over the next five year period. "Last year the revenue from tobacco industry was Rs 5,500 crore. Obviously, we are looking to generate Rs 15,000 crore in next five years," he said.

With inputs from PTI