NRI Problems: Setting up retail outlets in non-metro cities

Expanding working population in these cities which has created new pockets of consumption

By H. P. Ranina

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A view of Patna city
A view of Patna city

Published: Tue 13 Feb 2024, 1:55 PM

Last updated: Tue 13 Feb 2024, 2:36 PM

Question: My friends and I would like to set up a chain of retail stores in India. However the rent in the metros are too expensive even to consider setting up a single store. We are therefore thinking of setting up the retail outlets in non-metro cities. What are the prospects for doing so?

ANSWER: In fact, you will be taking the right decision if your friends and you decide to set up retail shops in Tier-2 and Tier-3 cities of India. The reason is that there is now an expanding working population in these cities which has created new pockets of consumption. Not surprisingly, global brands like Zara, H&M, Adidas, Nike, Starbucks, Marks & Spencer and others are fast expanding their footprint in these non-metro cities according to a recent report of an independent agency. Cities like Lucknow, Kochi, Jaipur, Chandigarh, Patna, Goa and Coimbatore are seeing an influx of fashion and food and beverage brands. This has happened in view of e-commerce having taken root in smaller cities. The pandemic-led spurt in digital subscriptions has prompted young consumers to explore international brands. About 50 per cent of online shoppers from urban India are residing in Tier-2 and Tier-3 cities. This figure is projected to reach 60 per cent by 2030. Most of these non-metro cities have established trade and business hubs and are now witnessing a healthy traction in commercial office space. Retail supply has matured, moving away from vanilla stores on high streets to the entry of investment grade developers who are setting up quality retail spaces for entertainment and shopping.

H. P. Ranina is a practising lawyer, specialising in tax and exchange management laws of India.
H. P. Ranina is a practising lawyer, specialising in tax and exchange management laws of India.

Question: Is patent filing in India a laborious process? I am told that there are several issues which need to be addressed, resulting in delays.

ANSWER: In the past, considerable time was involved for registering patents. Delays in patent examination and approvals had created obstacles for innovators. However, there has been a dramatic change in recent months. During 2023, 90,300 patents were filed giving an average of around 250 patents filed per day. According to an official report, between 2014 and 2023, education and scientific institutions doubled their share in patent filing. Research advancements in rapidly growing industries are primarily driven by intellectual property particularly in areas of computer science and communications. Mechanical engineering and chemical science have been in the vanguard for IP creation by companies and individuals who are taking the lead in fields of computers, biomedical and traditional domains of chemistry. The reduction in patent pendency is due to hiring more professionals with technical backgrounds and setting up a modern infrastructure. This has resulted in setting up an efficient ecosystem and a higher number of patents being granted. More particularly, there is a significant reduction in patent pendency in the fields of chemistry and polymers. As per the data available, 840,000 patents have been filed in India upto December 2023.

Question: My family members in India have taken a medical insurance policy with a well known company. However, only such hospitals which are part of the network of this company provide the cashless insurance facility. This creates problems if treatment is to be taken in a hospital which is not part of the network. Is there any solution for this?

ANSWER: The issue which you have raised is now sought to be corrected by the General Insurance Council which has recently introduced a new system called ‘Cashless everywhere’. This will facilitate health insurance policy holders to avail of cashless treatment even in hospitals which are not part of their insurance company’s network so as to ensure that patients at the time of admission do not have to make initial or down payments to non-network hospitals. Further, it will cut costs and end disputes, apart from reducing the possibility of fraud through real time claims verification. You must inform your family members who have taken out the mediclaim policy that they need to intimate to the insurance company 48 hours before the planned procedures are undertaken and, in case of emergencies, the company must be informed within 48 hours.

H. P. Ranina is a practicing lawyer, specializing in tax and corporate laws of India.

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