Tag: Why FDI info is low in India?

  • Quick Commerce Is No Longer About 10-Minute Delivery — It Is Becoming a New Retail Format

    Quick Commerce Is No Longer About 10-Minute Delivery — It Is Becoming a New Retail Format

    When quick commerce started gaining traction in India, the big attraction was simple: get your order in 10 minutes.

    Milk, bread, eggs, snacks, cold drinks, fruits and vegetables — things people needed quickly could suddenly reach their homes without a trip to the neighbourhood store.

    For a while, the entire conversation was about speed.

    Who can deliver faster?

    10 minutes or 15 minutes?

    But I think we are now looking at something much bigger.

    Quick commerce is slowly becoming a new retail format.

    The reason is quite simple. These platforms are no longer trying to solve only an urgent shopping need. They are trying to become part of the customer’s regular shopping behaviour.

    Think about how people actually shop.

    They don’t always wake up thinking, “Today I will visit a grocery store.”

    They think, “We are out of milk.”

    “I need snacks for tonight.”

    “I forgot toothpaste.”

    “Guests are coming.”

    “I need a small gift.”

    These are shopping missions.

    Quick commerce is trying to capture these missions one by one.

    And that changes the game.

    The first generation of quick commerce was largely about groceries and everyday essentials. Today, the assortment is moving into many other categories — beauty, personal care, electronics, gifting, home products and more.

    Once the customer starts buying these categories regularly, the platform is no longer just delivering products.

    It is competing for the customer's basket.

    That is where I believe traditional retailers need to pay attention.

    Because the biggest change is not happening in delivery.

    It is happening in inventory.

    A 10-minute delivery promise sounds impressive to the customer. But behind that promise sits a much more complicated operation.

    The product has to be available close to the customer.

    The forecast has to be reasonably accurate.

    The right quantity has to be stocked.

    The order has to be picked quickly.

    The product has to be packed correctly.

    And someone still has to deliver it profitably.

    If the retailer keeps too little stock, the customer sees “out of stock.”

    Keep too much stock and the business starts carrying unnecessary working capital. Products age. Discounts increase. Fresh products get damaged. Wastage goes up.

    This becomes particularly important in fruits and vegetables and other perishables.

    A retailer cannot solve an availability problem simply by putting more stock into a dark store.

    The quality of the forecast matters.

    This is something I have seen repeatedly in retail. Inventory problems are often treated as a technology problem. In reality, the technology can only work as well as the demand data, processes and discipline behind it.

    That is why I think the next competitive battle in quick commerce will not simply be about who delivers in 10 minutes.

    It will be about who can maintain better availability without carrying excessive inventory.

    That is a very different game.

    Traditional retailers already understand many parts of this equation.

    They have spent decades managing assortment, inventory, margins, store productivity, shrinkage, wastage and working capital.

    What is changing is the operating model.

    A traditional store waits for the customer to walk in.

    A dark store waits for the order to come through the app.

    The traditional store uses shelves to present products.

    The quick-commerce platform uses the app to present products.

    The traditional retailer measures sales per square foot.

    The quick-commerce operator needs to think about sales, orders and contribution from each fulfilment location.

    The customer sees a simple app screen.

    Behind that screen is a fairly complex retail operation.

    And this is where I think the conversation around quick commerce needs to become more mature.

    Sales growth alone is not enough.

    Quick Commerce Retailers need to ask harder questions.

    What is the inventory turn?

    What percentage of orders get fulfilled completely?

    How often does the customer find the product unavailable?

    What does picking cost?

    What does delivery cost?

    How much inventory gets damaged?

    How much money is tied up in local inventory?

    And perhaps the most important question:

    Are customers coming back because the platform is genuinely useful, or only because someone is subsidising the order?

    These questions will become increasingly important as the sector matures.

    There is another change that I find particularly interesting.

    The traditional argument used to be:

    Online versus offline.

    I don’t think that is the right argument anymore.

    A physical store can also become a digital fulfilment point.

    A customer can walk into the store and buy something.

    Another customer, sitting two kilometres away, can order from the same inventory.

    The same store can therefore serve both customers.

    This changes the role of the store.

    It can become a place for shopping, product discovery, experience, fulfilment and local inventory — all at the same time.

    So, rather than asking whether quick commerce will replace traditional retail, I would ask a different question:

    How quickly will traditional retailers learn to operate with the same level of convenience? and How efficiently QUick Commerce companies can run like a Retailer to ensure backend excellence and inventory availability at optimium costs

    Because the customer has already changed.

    Once someone gets used to receiving a product within minutes, asking that customer to wait two days for a basic product can feel very different.

    Convenience changes expectations.

    And expectations eventually change retail.

    I don’t think the future of quick commerce will be decided by the fastest delivery time.

    The 10-minute promise helped create the market.

    But speed alone won’t build a sustainable retail business.

    The winners will need to get several things right at the same time:

    Right product. Right location. Right inventory. Right price. Right availability. Right cost.

    That is retail.

    Quick commerce has simply put that retail equation on a much smaller clock.

    And perhaps that is the real story.

    Quick commerce started by promising to deliver faster.

    It is now trying to change the way we shop.

    The next phase will tell us whether it can also change the economics of retail.

  • UPI Charges: What Retailers Actually Need to Watch

    UPI Charges: What Retailers Actually Need to Watch

    My take on the whole issue: Off late the income of Visa and Master card has dropped due to high usage of all kinds of transactions through UPI. The merchants are having multiple benefits- instant cash, no charges as merchant. Easy to maintain no need to keep enough cash and change for transaction closure. To run the UPI- UPI companies ,VIZA / Master card and banks also have to make money. Hence it is levied. When you read you will understand , how it is structured.

    But one point here merchants have already inbuilt their margins assuming debit card and credit card transactions. So cash and UPI was helpful in negating the losses out of credit card and debit card purchases.

    In my view , here the US companies are going to get more benefits like Phone Pe and Google pay along with Banks, both are US backed companies like Walmart and Google combined have a market share of 78% appx. Ultimately this charge will come to customers only in some form. Ideally impact is very negligible when it comes to few transactions but in large transactions in numbers may be very high.

    UPI Charges: What Has Changed, Who Pays and What It Means for Retailers

    For years, UPI has been associated with one simple proposition: pay digitally without paying a transaction fee.

    That model is now changing for certain merchant transactions.

    MDR is a fee associated with processing a digital payment. It is a cost within the payment ecosystem rather than a separate charge that a customer necessarily sees on the bill.

    For example, if a customer makes a ₹10,000 UPI payment to a merchant and the applicable MDR is 0.4%, the MDR works out to:

    ₹10,000 × 0.4% = ₹40

    The customer does not automatically pay an additional ₹40. The cost is handled within the payment ecosystem and, depending on the applicable rules and commercial arrangements, becomes a cost for the merchant/payment participants.

    That distinction is important.

    Scenario 1: Customer buys groceries for ₹1,500

    A customer purchases groceries from a local retailer.

    Bill: ₹1,500 Payment: UPI MDR: Zero under the ₹2,000 threshold.

    For the customer, nothing changes.

    For the retailer, there is no MDR on this transaction.

    This is particularly relevant for kirana stores and small-ticket retail where most transactions are below ₹2,000.

    Scenario 2: Customer buys a television for ₹45,000

    Now consider a consumer-durable purchase.

    Bill: ₹45,000 Payment: UPI Applicable MDR: 0.4%

    The MDR would be:

    ₹45,000 × 0.4% = ₹180

    The customer still pays ₹45,000, assuming the merchant does not separately pass on the payment cost.

    But for the retailer, ₹180 becomes an additional payment-processing cost.

    This is where retailers need to start looking carefully at their payment economics.

    Scenario 3: A customer buys jewellery for ₹1.5 lakh

    Consider a jewellery transaction.

    Purchase: ₹1,50,000 Payment: UPI Rate: 0.4% Calculated MDR: ₹600

    However, where the transaction falls under the applicable ₹300 cap for transactions of ₹75,000 or more, the MDR would be capped at:

    ₹300

    This makes the effective rate much lower than 0.4% for a high-value transaction.

    For retailers handling large-ticket purchases, the cap becomes commercially significant.

    Scenario 4: Customer transfers ₹25,000 to a friend

    This is completely different.

    Person A → Person B Amount: ₹25,000 Payment: UPI

    There is no merchant involved.

    Therefore, this is a P2P transaction, and the MDR framework for merchant payments does not mean that the customer suddenly pays a percentage on this transfer.

    ₹25,000 sent = ₹25,000 received.

    This distinction between P2P and P2M is one of the most important points to understand.

    Scenario 5: Restaurant bill of ₹3,500

    Four people have dinner and the restaurant bill is:

    ₹3,500

    They pay the restaurant through UPI.

    If the applicable merchant MDR is 0.4%:

    ₹3,500 × 0.4% = ₹14

    The customer does not necessarily see a ₹14 “UPI charge”.

    But the restaurant now has to consider payment-processing cost when calculating its margins.

    For a restaurant operating at a 5–10% operating margin, even relatively small payment costs can matter when multiplied across thousands of transactions.

    Scenario 6: Fuel purchase

    A customer buys fuel worth:

    ₹4,000

    The transaction falls into an essential-sector category covered by a special fixed MDR structure.

    Instead of applying a percentage in the same way as a normal merchant transaction, the applicable charge is specified at ₹5 per transaction.

    So:

    Fuel purchase = ₹4,000 Applicable MDR = ₹5

    This creates a very different economics from a normal 0.4% merchant transaction.

    Scenario 7: Telecom payment

    Suppose a customer makes a telecom-related payment of:

    ₹10,000

    Telecom is among the specified essential sectors for which the framework provides a special ₹5 per transaction structure.

    So the merchant’s payment cost is not simply:

    ₹10,000 × 0.4% = ₹40

    Instead, the specified category-based charge applies.

    This illustrates why retailers and businesses should not assume that one MDR rate applies to every UPI transaction.

    Scenario 8: Mutual fund or securities transaction

    Financial-market transactions have another structure.

    For specified capital-market transactions, including mutual funds and securities-related transactions, the rate is 0.02%, subject to the applicable ₹300 cap.

    For example:

    Transaction = ₹5,00,000

    At 0.02%:

    ₹5,00,000 × 0.02% = ₹100

    So the applicable charge would be ₹100, assuming the transaction qualifies for this category.

    Again, the category matters.

    What does this mean for retailers?

    This is where the issue becomes commercially interesting.

    Retailers have traditionally looked at payment methods mainly from the customer’s convenience perspective.

    That will increasingly need to change.

    A retailer should now look at:

    Sales value → Payment mix → MDR → Payment cost → Gross margin → Net contribution

    Imagine a retailer doing:

    ₹10 crore annual sales through UPI

    If the average effective payment cost were 0.4%, the theoretical annual payment cost would be:

    ₹10 crore × 0.4% = ₹4 lakh

    That is not necessarily the actual cost because the effective MDR depends on transaction size, category, caps, merchant classification and applicable arrangements.

    But the example shows the scale of the issue.

    Who could gain?

    The change creates a clearer revenue mechanism for participants in the payment ecosystem.

    Banks, payment service providers and other participants can potentially earn from qualifying merchant transactions.

    The broader objective stated by the Government is to make the UPI ecosystem financially sustainable as transaction volumes continue to grow.

    That matters because UPI is no longer a small payment system. It has become a major part of India’s retail-payment infrastructure.

    Who could feel the pressure?

    The pressure is more likely to be felt by businesses with:

    • High-value UPI transactions
    • Large transaction volumes
    • Low gross margins
    • Heavy dependence on UPI
    • Limited ability to absorb payment-processing costs

    A ₹10 or ₹20 payment-processing cost may look insignificant on one transaction.

    Multiply it by 10 lakh transactions and the number becomes commercially meaningful.

    The bigger retail question

    The interesting question for retailers is not:

    “Will customers stop using UPI?”

    The more relevant question is:

    “What will UPI cost my business after the new MDR structure?”

    Retailers should start tracking payment costs just as they track:

    • Card charges
    • Marketplace commissions
    • Delivery costs
    • Discounts
    • Shrinkage
    • Banking charges
    • Logistics costs

    Payment cost is becoming another operating-cost variable.

    For a retailer, the right dashboard could therefore include:

    UPI sales % | Average UPI transaction value | Number of UPI transactions | MDR paid | MDR as % of sales | Net margin impact

    This will tell management whether the cost is material or negligible.

    One simple way to remember the change

    Think of UPI in three buckets:

    P2P: Person → Person Generally free.

    Small-ticket P2M: Customer → Merchant Up to ₹2,000 → Zero MDR under the framework.

    Specified higher-value P2M: Customer → Merchant Above the threshold → MDR may apply depending on transaction category.

    So the headline “UPI will now be charged” is too simplistic.

    The real story is:

    UPI remains free for ordinary person-to-person transfers, while specified merchant transactions can carry a regulated payment-processing cost.

    For retailers, banks, fintech companies and consumers, the real impact will depend on transaction value, category, payment mix and how businesses ultimately manage the cost.

    Note: The examples above are illustrations based on the notified rates and categories. Actual merchant charges can depend on the merchant’s classification, transaction type and applicable commercial arrangements.

  • India’s Skincare Market: Who Is Winning, Who Is Struggling and What Comes Next?

    India’s Skincare Market: Who Is Winning, Who Is Struggling and What Comes Next?

    India’s Skincare Market: Who Is Winning, Who Is Struggling and What Comes Next?

    India’s skincare market is growing. But the bigger story is not growth. It is the redistribution of growth.

    Consumers are moving away from generic skincare and demanding ingredients, efficacy, transparency and convenience. At the same time, digital-first brands are moving offline, legacy FMCG brands are upgrading their portfolios, and global companies are acquiring successful Indian brands.

    So, who actually dominates the market today?

    And more importantly — which brands are building the strongest position for 2026 and beyond?

    This article looks at the current state of India’s skincare industry, the leaders, the challengers, their key problems, what is driving growth and where the market is heading.

    What you should learn from this article

    1. Who currently dominates Indian skincare?
    2. Which brands are gaining momentum?
    3. What is driving consumer demand?
    4. Why are some D2C brands struggling despite high sales?
    5. What will shape the skincare market from 2026 onwards?

    1. First, understand the market

    Estimates put India’s skincare market at roughly $2.7–3.2 billion in 2025, depending on how skincare is defined. Facial care represents approximately 85% of the category.

    The market is growing at roughly 7–10% annually, but growth is becoming increasingly fragmented.

    The structural picture

    HUL remains the clear company-level leader with around 28% retail value share in 2025.

    But there is an important warning:

    HUL’s share has fallen from around 37% in 2020 to 28% in 2025.

    That tells us something important.

    The leader is still leading — but the market is becoming much more competitive.

    Market leadership snapshot

    HUL                    ████████████████████████████ 28%
Top 5 players combined ██████████████████████████████████████████████████ ~50%
Others                 █████████████████████████████████████████████████

    Note: Brand-level market shares are not consistently publicly disclosed. The 28% figure refers to HUL’s company-level skincare value share, not Ponds alone.

    The competitive battlefield now includes HUL, Beiersdorf, L’Oréal, P&G, Honasa and fast-growing independent brands such as Plum, alongside strong Ayurvedic and prestige players.

    2. Who is winning?

    The market can broadly be divided into four groups:

    Legacy FMCG: Ponds, Lakmé, Vaseline, Garnier Global premium-mass: Nivea, Olay, L’Oréal Paris Digital-first challengers: Mamaearth, The Derma Co, Minimalist, Plum Ayurvedic/premium heritage: Himalaya, Forest Essentials, Biotique, Kama Ayurveda

    The interesting part?

    The fastest growth is increasingly coming from brands that combine science + digital discovery + omnichannel distribution.

    Article content

    3. Brand-by-brand: Current State

    Ponds — Strong leader, but facing disruption

    Ponds remains one of HUL’s biggest skincare engines and benefits from enormous distribution across general trade, modern trade, e-commerce and quick commerce.

    HUL has been repositioning Ponds away from its traditional tone/fairness associations toward science-led premium skincare.

    Current state: Strong scale and distribution.

    Key challenge: Defend leadership while younger consumers shift toward ingredient-led brands.

    What Ponds needs to do: Convert its enormous reach into stronger relevance among Gen Z and premium skincare consumers.

    Lakmé — Powerful ecosystem, but skincare must keep evolving

    Lakmé benefits from its strong brand recognition, modern trade presence, salons, e-commerce and mass distribution.

    Its expansion into products such as retinol shows the shift toward science-backed skincare.

    Current state: Strong legacy brand with a powerful beauty ecosystem.

    Key challenge: Maintain relevance as consumers increasingly evaluate products by ingredients and efficacy rather than brand heritage alone.

    Nivea — Mature growth, excellent profitability

    Nivea generated approximately ₹1,540 crore revenue in India in FY25, while net profit jumped sharply.

    That is an important signal.

    Revenue was almost flat, but profitability improved dramatically.

    Current state: Mature but financially strong.

    Key challenge: Reignite volume/value growth in a slowing mass market.

    Its Sanand manufacturing facility also shows how localization can reduce import dependence and improve supply-chain resilience.

    Olay — Strong premium positioning

    Olay remains an important premium-mass skincare player, particularly in anti-ageing and brightening.

    Its challenge is not brand awareness. It is winning the modern Indian skincare conversation against highly visible serum and active-based challengers.

    Current state: Strong premium positioning.

    Key challenge: Deliver enough innovation and local relevance to justify its premium.

    Garnier & L’Oréal Paris — Winning through innovation and accessibility

    L’Oréal is benefiting from strong skincare momentum, particularly through Vitamin C, UV protection, glycolic acid and brightening products.

    Garnier has another advantage: it can take ingredient-led skincare into mass markets through affordable formats.

    Current state: One of the strongest combinations of science, marketing and distribution.

    Key challenge: Maintain innovation while protecting affordability.

    Mamaearth — From growth-at-any-cost to profitable growth

    Mamaearth is perhaps the most important D2C case study.

    Honasa’s FY25 revenue reached approximately ₹2,067 crore, but PAT declined 34% to ₹73 crore while advertising remained extremely high.

    Then came FY26.

    Revenue increased approximately 16% to ₹2,392 crore, while PAT jumped 175% to ₹200 crore.

    This is a major lesson:

    The D2C model is not dead. Undisciplined D2C economics are.

    Current state: Recovery and restructuring.

    Key challenge: Sustain growth without excessive advertising and channel costs.

    The Derma Co — One of the strongest challengers

    The Derma Co represents the new Indian skincare consumer better than almost any other brand.

    Its proposition is simple: actives, efficacy and dermatological credibility.

    It crossed approximately ₹750 crore ARR and was recognized as India’s No. 1 sunscreen brand by Euromonitor for CY24.

    Current state: High-growth challenger.

    Key challenge: Scale offline without losing its science-led identity and profitability.

    Minimalist — A strategic success story

    Minimalist has become one of India’s strongest examples of ingredient-led skincare.

    Founded in 2020, it reached more than ₹500 crore ARR and remained profitable before HUL acquired a 90.5% stake for approximately ₹2,706 crore.

    The acquisition says a lot about the future.

    Global-scale FMCG distribution + D2C innovation is becoming a powerful combination.

    Current state: High-quality challenger backed by HUL.

    Key challenge: Scale dramatically without diluting consumer trust and brand authenticity.

    Plum — Quietly building a healthier model

    Plum grew approximately 28% to ₹515 crore in FY26 and had already turned profitable in FY25.

    Its model is increasingly omnichannel, with offline contributing around 30% of revenue.

    Current state: One of the more balanced D2C success stories.

    Key challenge: Scale while maintaining unit economics.

    Himalaya — Heritage remains a competitive advantage

    Himalaya continues to benefit from strong pharmacy and general-trade distribution, Ayurvedic credibility and international presence.

    Unlike many newer brands, its heritage itself is an asset.

    Current state: Strong mass and international presence.

    Key challenge: Make traditional herbal positioning relevant to a younger consumer increasingly asking for clinical evidence and active ingredients.

    Article content

    4. What is actually driving the market?

    Five forces are reshaping skincare:

    1. Ingredient awareness Consumers now actively search for niacinamide, Vitamin C, retinol, salicylic acid and SPF.

    2. Premiumization Consumers are moving from basic creams toward serums, sunscreens, targeted treatments and multi-step routines.

    3. Social discovery Influencers, dermatologists and social media increasingly shape product discovery.

    4. Quick commerce Beauty sales through quick commerce are growing dramatically. Face wash, sunscreen and other repeat-use products fit the model particularly well.

    5. Omnichannel expansion The winning model is no longer pure D2C.

    It is:

    D2C + marketplaces + modern trade + general trade + quick commerce.

    5. The biggest challenges ahead

    The industry has six major pressure points:

    CAC inflation: Advertising-led growth is becoming expensive.

    Margin pressure: Quick-commerce commissions and visibility costs can erode profitability.

    Channel conflict: Different prices across websites, marketplaces and stores can damage brand economics.

    Generic natural positioning: “Natural” alone is no longer enough.

    Import dependency: Specialty actives, UV filters and other ingredients remain vulnerable to global supply chains.

    Trust: Counterfeits, grey-market inventory and poor storage can damage consumer confidence.

    The next phase will therefore reward operational discipline as much as marketing creativity.

    6. What changes from 2026 onwards?

    I see six major trends.

    1. Science will beat vague claims

    “Natural” will not disappear.

    But natural + evidence will outperform natural alone.

    2. Sunscreen becomes a major battlefield

    Daily SPF adoption is still expanding, creating a large opportunity for brands that can combine efficacy, texture, affordability and education.

    3. Quick commerce becomes a strategic channel

    Brands will stop treating Blinkit, Zepto and Instamart only as distribution channels.

    They will increasingly treat them as media + retail + convenience platforms.

    4. D2C brands will consolidate

    The market will favour brands with strong repeat purchase, healthy contribution margins and differentiated products.

    Revenue alone will no longer impress investors.

    Profitable growth will.

    5. M&A will accelerate

    The HUL–Minimalist transaction and global interest in premium Indian beauty demonstrate the strategic value of Indian skincare brands.

    Expect more consolidation.

    6. India can become a skincare manufacturing and export hub

    Ayurvedic heritage, local manufacturing and cost-efficient formulation can create an export opportunity — particularly in GCC, Africa and other emerging markets.

    The final takeaway

    India’s skincare market is not simply growing. It is changing shape.

    HUL still dominates structurally.

    Nivea remains financially strong.

    L’Oréal is winning through innovation.

    The Derma Co is building serious momentum.

    Minimalist has already attracted strategic acquisition.

    Mamaearth is demonstrating that disciplined D2C economics can work.

    Plum is proving profitability can coexist with growth.

    Himalaya continues to leverage heritage and distribution.

    The real winner of 2026 and beyond, however, will not necessarily be the brand with the biggest advertising budget.

    It will be the brand that can combine:

    Efficacy + Trust + Innovation + Distribution + Repeat Purchase + Profitable Growth.

    That is where India’s next skincare battle will be fought.

    This study is an assessment of a writer. Please do your own research and decide way forward. Don’t depend alone what we are writing and expressing our views.

  • The Real Challenge in Fashion Retail: Turning Inventory into Profitable Sales

    The Real Challenge in Fashion Retail: Turning Inventory into Profitable Sales

    In fashion retail, the biggest problem is rarely buying merchandise.

    The real problem is what happens after the merchandise arrives.

    A retailer can have experienced buyers, strong vendor relationships, detailed market research, carefully planned ranges and significant seasonal budgets. Yet, at the end of the season, the same retailer may still find itself sitting on unsold inventory and offering deep discounts to clear it.

    That is the fundamental challenge of fashion retail.

    The question is not simply:

    “Did we buy the right merchandise?”

    The more important question is:

    “How efficiently did we convert the merchandise we bought into profitable sales?”

    Because in fashion retail, inventory does not just represent stock. It represents committed capital, planned gross margin, future markdown risk and, ultimately, the quality of merchandising decisions.

    Fashion Buying Is a High-Stakes Commitment

    A fashion buyer or merchandiser does not wake up every morning and purchase inventory based on yesterday’s sales.

    Fashion buying works very differently.

    Merchandising teams make commitments well in advance of the season. They study trends, review vendor presentations, analyse previous performance, understand customer preferences and build product ranges across categories.

    Typically, the merchandise portfolio contains three broad layers.

    The first is core merchandise. These are products that customers expect to find throughout the year. They may not always create excitement, but they provide consistency and predictable demand.

    The second is seasonal or festival merchandise. These products are designed around specific periods—festivals, weather changes, weddings or other demand peaks.

    The third and most challenging category is fashion merchandise.

    Fashion moves quickly. Consumer preferences shift. Colours, silhouettes, fabrics and styles can suddenly become desirable—or lose relevance.

    Retailers cannot ignore fashion because customers expect freshness. However, fashion buying involves significantly higher risk.

    And then comes another complex variable: size.

    The same product may perform differently across geographies because customer body profiles and size preferences differ. A size mix that works extremely well in Punjab may not work in the Northeast. A retailer operating across multiple regions cannot simply apply one universal size curve everywhere.

    Therefore, before the season even begins, the merchandising team has already made a series of critical decisions:

    What categories should we buy?

    Which designs should we select?

    How many options should we carry?

    How much inventory should we commit?

    What should be the size ratio?

    When should deliveries arrive?

    And how much of the budget should we allocate to each product category?

    Everything may appear perfectly planned.

    But fashion retail rarely follows the plan exactly.

    The Problem Is Not Always Demand Forecasting

    When inventory does not sell, the first solution many people suggest is demand forecasting.

    Better forecasting is certainly useful—but it does not solve the entire problem.

    Fashion retailers often place orders months before the merchandise reaches the store. Production has lead times. Vendors require advance commitments. Seasonal products may only be available during a specific manufacturing window.

    A retailer cannot simply wait until the season begins, observe customer demand and then immediately replenish the winning products.

    By the time the demand becomes clear, the buying decision may already have been made.

    Vendor capability also plays a major role.

    If a vendor can manufacture and replenish products frequently, the retailer can operate with greater flexibility. The retailer can test the market, identify winning styles and reorder them.

    But many seasonal and fashion products do not offer that luxury.

    They are produced for a particular season, ordered in advance and supplied according to a pre-decided delivery schedule.

    That means fashion retail is not merely a forecasting problem.

    It is a commitment and inventory-risk management problem.

    The quality of the buying decision depends not only on predicting what customers will buy, but also on understanding:

    How much should we commit before demand becomes visible?

    How much flexibility does our supply chain provide?

    How quickly can we react if the product performs differently than expected?

    These questions often matter more than improving the forecasting model by a few percentage points.

    The ₹100 Inventory Question

    Let us simplify the entire challenge.

    Imagine a retailer purchases merchandise worth ₹100.

    The most important question is not simply whether that ₹100 eventually sells.

    The important question is:

    At what price did it sell?

    That ₹100 worth of inventory can move through multiple stages.

    The first portion sells at full price.

    This is the most profitable outcome. The retailer captures the planned margin and validates the quality of the buying and merchandising decisions.

    The second portion sells during a planned festival or promotional period.

    The retailer may offer discounts, but these discounts are already part of the commercial plan. The retailer expects lower percentage margins but anticipates significantly higher sales volumes.

    This is not necessarily a problem.

    In fact, a well-planned festival period can generate substantial gross margin in absolute value because of the higher sales volume.

    The real problem begins with the third layer.

    This is the inventory that remains after the main selling opportunity has passed.

    Perhaps the design did not work.

    Perhaps the colour was wrong.

    Perhaps the fashion trend moved in another direction.

    Perhaps customers bought only certain sizes.

    The retailer may have sold Medium and Large but still be left with significant quantities of Small and Extra Large.

    Or the retailer may have sold one option within a product line while other options remained untouched.

    At this stage, inventory stops behaving like an asset.

    It begins behaving like a liability.

    Unsold Inventory Destroys Gross Margin

    Once merchandise misses its planned selling window, the retailer faces difficult choices.

    The first option is to offer deeper discounts.

    The second is to carry the inventory into the next period.

    The third is to attempt alternative channels to liquidate the stock.

    Each option carries a cost.

    Deep discounting directly affects gross margin.

    Carrying inventory forward blocks working capital and creates additional risk.

    And alternative liquidation channels require careful execution to avoid damaging the brand or cannibalising regular store sales.

    This is why gross-margin performance should never be evaluated only through sales growth.

    A retailer can achieve strong sales and still destroy profitability if too much inventory eventually moves through deep markdowns.

    The merchandising team’s real efficiency lies in its ability to convert committed inventory into sales at the right margin levels.

    A buyer who purchases ₹10 crore worth of merchandise is not necessarily successful because ₹10 crore eventually sells.

    The buyer becomes successful when a high proportion of that merchandise sells at full price or within planned promotional margins—and only a limited portion falls into distress liquidation.

    That is the difference between buying merchandise and managing inventory productivity.

    Every Fashion Retailer Needs a Margin Waterfall

    Retailers should stop looking at inventory as one large number.

    Instead, they should create a weekly inventory and margin waterfall.

    Every week, the merchandising and leadership teams should be able to answer four simple questions.

    How much inventory have we sold at full price?

    How much have we sold at planned festival or promotional prices?

    How much have we sold through additional markdowns?

    How much inventory is still left and at risk?

    This simple framework can dramatically improve decision-making.

    Because the problem becomes visible before the end of the season.

    If the retailer waits until the annual review to discover that gross margin has missed the budget, it is already too late.

    By then, the unsold inventory has accumulated, markdowns have accelerated and the organisation has lost its ability to take corrective action.

    Weekly visibility changes the conversation.

    The buyer no longer says, “Sales are looking good.”

    The organisation asks:

    Are we selling the right inventory at the right margin?

    That is a far more powerful question.

    Predict Gross Margin Before the Quarter Ends

    Once retailers track inventory through these different selling layers, they can begin predicting gross-margin performance much earlier.

    For example, if the retailer notices that a growing proportion of inventory is moving into deeper markdowns, management can immediately estimate the impact on future gross margin.

    Similarly, if full-price sell-through remains strong, the retailer can protect margin expectations even before the season ends.

    This creates a much more dynamic approach to gross-margin management.

    Instead of reviewing profitability after the quarter closes, the retailer can manage profitability while the season is still active.

    The merchandising team can identify slow-moving categories.

    Stores can rebalance inventory.

    Winning products can receive greater visibility.

    Slow-moving sizes can move to geographies where demand is stronger.

    Promotional activity can become targeted rather than broad.

    And management can intervene before the stock reaches the stage of distress liquidation.

    Alternative Channels Can Protect Inventory Value

    Today, fashion retailers also have an advantage that did not exist at the same scale a few years ago.

    They have direct access to customers through digital channels.

    Video commerce and live product selling have become particularly effective tools for inventory liquidation.

    For example, a retailer operating in the Northeast may find itself with merchandise that is not performing strongly in its local stores. Instead of immediately applying deep in-store discounts, the retailer can showcase the merchandise through video-led selling and reach customers beyond the physical catchment area.

    The objective is not simply to clear stock.

    The objective is to clear stock intelligently.

    A retailer should always try to find the highest-value channel available for unsold merchandise before moving to aggressive markdowns.

    Digital selling, live commerce, targeted customer databases and inter-store inventory transfers can all provide additional opportunities to recover value.

    The key is to act early.

    The longer a retailer waits, the fewer options remain.

    The KPI That Fashion Retailers Should Watch Every Week

    Fashion retail leaders need to move beyond traditional sales reporting.

    The most important weekly KPI framework should connect inventory, sell-through and realised margin.

    A merchandising team should know how much of its inventory has moved through:

    • Full-price sales
    • Planned festival or promotional sales
    • Additional markdown sales
    • Unsold and ageing inventory

    This should not remain a year-end analysis.

    It should become a weekly management discipline.

    Because the moment a retailer understands the composition of its sales, it also begins to understand the future composition of its gross margin.

    And that is where better decisions begin.

    The Bottom Line

    Fashion retail will always involve uncertainty.

    Trends will change.

    Customers will surprise buyers.

    Sizes will behave differently across regions.

    Some designs will outperform expectations while others will fail completely.

    No forecasting system can eliminate these realities.

    But retailers can control how quickly they identify risk and how intelligently they respond to it.

    The strongest fashion retailers will not necessarily be the ones that predict every trend perfectly.

    They will be the ones that build a more efficient system for converting inventory into profitable sales.

    Because ultimately, the real measure of merchandising success is not how much merchandise a buyer purchased.

    It is not even how much merchandise the retailer sold.

    The real measure is much more powerful:

    How much of the inventory sold at full price, how much sold within planned promotional margins, how much required additional discounting—and how much was left behind?

    When a retailer starts reviewing these numbers every week, inventory stops being a year-end problem.

    It becomes a business variable that management can actively control.

    And in fashion retail, where every buying decision carries risk, that visibility can be the difference between meeting the gross-margin budget and watching it disappear into markdowns.

  • India What a Decade of Borrowing Actually Bought Us. Are we in a Debt Trap?

    India What a Decade of Borrowing Actually Bought Us. Are we in a Debt Trap?

    India’s Public Debt Story (2015–2025): What a Decade of Borrowing Actually Bought Us. Are we in a Debt Trap?

    India’s combined government debt has roughly doubled over the past decade. Central government debt alone climbed from about ₹121 trillion in FY2020 to an estimated ₹197 trillion by FY2026. State liabilities nearly tripled, from ~₹32.6 trillion in FY2016 to ~₹94 trillion by FY2025.

    Numbers like these trigger one of two reactions: alarm or indifference. Neither is entirely right.

    The better question is: What drove this rise, where did the money go, and where does it leave India today?

    Here’s the decade, unpacked.

    The pattern: steady drift, then a shock, then a slow climb-down

    Pre-2020, India’s fiscal deficit sat in a fairly disciplined 3–4% of GDP band, broadly consistent with FRBM targets — even if actual numbers occasionally missed the mark (FY2019 came in around 3.4% against a 3.3% target).

    Then COVID hit. The central fiscal deficit spiked to roughly 9.5% of GDP in FY2021 as revenue collapsed and emergency spending — cash transfers, free food grain, MSME credit guarantees, health spending — went out the door. Debt-to-GDP jumped by an estimated 8–10 percentage points in a single year.

    Since then, the story has been consolidation: the deficit has been brought down to around 5–6% of GDP, with a budgeted target of 4.4% for FY2026. It’s real progress, even if the debt base it’s working off is now structurally higher than it was five years ago.

    Three episodes that explain most of the swings Debt to GDP ratio %

    Demonetisation (Nov 2016): Intended to curb black money and push digital transactions, it also slowed activity and tax collections in the short run — GDP growth cooled and the fiscal deficit widened modestly (to around 3.5% of GDP against a 3% target) in FY2017.

    GST rollout (Jul 2017): A genuine structural reform with long-term revenue upside, but the transition wasn’t free. Collections initially undershot expectations, and the Centre had to borrow to compensate states during the changeover — nudging FY2018’s deficit above target.

    COVID-19 (2020–21): By far the biggest driver. A relief package of ₹20 trillion, layered onto a collapsing revenue base, took the deficit from roughly 3.5% to 9.5% of GDP in one year. Was it worth it? Most independent analyses — including from the IMF and RBI — suggest yes: the counterfactual (a sharper austerity response) likely meant a materially deeper contraction. The trade-off was a permanently higher debt stock in exchange for a shallower recession.

    Add to this two smaller but persistent pressures: periodic PSU bank recapitalisation (roughly ₹2.2 trillion across FY2018 and FY2020, needed to clean up bad loans) and an expanding footprint of welfare and housing schemes (PMAY, Ujjwala, MGNREGA) that keep revenue spending elevated even as capital expenditure has also been rising.

    The quiet number that matters most: interest payments

    Debt totals get the headlines, but the number that actually constrains policy choices is the interest bill. Central government interest payments rose from about ₹6.6 trillion in FY2020 to roughly ₹8.1 trillion by FY2022 and now consume somewhere in the range of 20–25% of central revenue receipts. That’s revenue that isn’t available for capex, subsidies, or further consolidation — it’s simply the cost of past borrowing. As global and domestic interest rates moved up through 2022–23, this burden has only gotten heavier.

    Where did the borrowed money go?

    It helps to separate how much India borrowed from what it was spent on. The story changed significantly after COVID:

    • FY2020–21: Borrowing largely supported emergency needs — food distribution, welfare support, MSMEs and bank recapitalisation. Necessary at the time, but with limited long-term growth impact.
    • FY2022–24: The focus shifted toward capital expenditure — roads, railways, healthcare and infrastructure. Capex as a share of GDP steadily increased.

    The positive shift: India increasingly moved from borrowing to support consumption toward borrowing to build productive assets.

    The road ahead

    The government’s own glide path targets a fiscal deficit closer to 4% of GDP, with debt-to-GDP expected to ease from its COVID-era peak (above 60%) toward the high-50s by FY2026. Getting there sustainably will likely depend on a few things playing out together: continued nominal GDP growth outpacing debt growth, disciplined targeting of subsidies rather than blanket cuts, tighter oversight of contingent liabilities and off-budget borrowing (state guarantees, PPP obligations), and a continued shift of the expenditure mix toward capital rather than revenue spending.

    None of this is dramatic. Fiscal consolidation rarely is — it’s mostly the unglamorous work of holding a line over several budget cycles. But the direction, so far, has been the right one.

     The takeaway

    The last decade brought demonetisation, GST, COVID-19 and a major infrastructure push. As a result, India’s public debt is roughly twice what it was in 2016.

    But debt is only one side of the story. India also built a stronger digital payments ecosystem, a unified tax system and significantly better infrastructure, while managing a strong post-COVID recovery.

    The key question now isn’t how much India owes, but whether economic growth can continue to outpace the growth in debt.

    What’s your read — was the post-COVID borrowing surge the right call, or did it set a debt base that will constrain policy for years to come? Would like to hear other perspectives on this.

    #IndianEconomy #PublicFinance #FiscalPolicy #Macroeconomics #Debt #Budget2026 #EconomicPolicy #India

  • India’s FDI Puzzle: Record Money In, Very Little Staying Back

    India’s FDI Puzzle: Record Money In, Very Little Staying Back

    India’s FDI Puzzle: Record Money In, Very Little Staying Back

    A simple, data-backed look at what’s really happening to foreign investment in India.

    Picture this: India just received its biggest-ever foreign investment cheque — $94.8 billion in FY 2025-26. Worth celebrating, right? But once the dust settled, only $7 billion of that actually stayed back to build something in India. The rest walked right back out. And this isn’t a one-off — it’s been the pattern for four years running. Here’s the simple version of what’s happening, why, and what India can do about it.

    1. Where Things Stand Today

    Two numbers matter here, and once you know the difference, the whole story becomes clear. Gross FDI is every dollar of foreign money that lands in India in a year. Net FDI is what’s left after two things get subtracted: money foreign investors pull back out (called repatriation — they sell their stake, take dividends, or exit), and money Indian companies send abroad to invest in their own overseas ventures. Net FDI is the honest number. It’s the capital that’s actually staying and creating jobs and factories here.

    YearGross FDI InNet FDI (Actually Stayed)% That Stayed
    FY 2020-21$82 Bn$44.0 Bn54%
    FY 2022-23$71 Bn$28.0 Bn39%
    FY 2023-24$71 Bn$10.6 Bn15%
    FY 2024-25$81 Bn$1.0 Bn1%
    FY 2025-26$95 Bn$7.0 Bn7%

    Source: RBI Bulletin; Ministry of Finance (Lok Sabha reply); CareEdge Ratings.

    Notice the trend: gross FDI is sitting near an all-time high, while net FDI collapsed to almost nothing in FY24-25 and has only partly recovered since. That gap — not the headline number — is the real story of Indian FDI right now.

    2. Why Are Outflows So High?

    Two things are pulling money back out, and both are simpler than they sound.

    • Repatriation: Investors who put money in years ago are now cashing out — selling their stake, taking profits, or exiting the business entirely. In FY23-24 alone, $44 billion was repatriated out of $71 billion that came in.
    • Outward investment: Indian companies are investing more abroad themselves, in their own overseas units and acquisitions. That counts as money leaving too — nearly $65 billion of it between FY24 and FY26.

    Together, these two are eating up almost all the new FDI that arrives. It’s a bit like a bucket with a big hole near the top — you can keep pouring water in, but the level barely rises.

    3. External Reasons — Forces India Doesn’t Control

    • Global money got expensive: Higher interest rates worldwide for much of this decade made investors more cautious and more eager to book profits early.
    • Geopolitical shocks: A conflict in early 2026 triggered a broad “risk-off” mood across emerging markets, India included — investors pulled back everywhere, not just here.
    • Trade tensions: Tighter US trade policy created uncertainty for investors weighing India exposure.
    • Tough competition: Vietnam, Thailand, Taiwan and Malaysia are actively out-marketing India with faster approvals and sharper incentives for the same pool of global capital.
    • A natural exit cycle: A lot of India’s FDI over the last decade came from private equity and venture capital, which is built to exit in 4-7 years by design. Many of those funds are simply reaching maturity at the same time.

    4. Internal Reasons — What’s In India’s Own Hands

    • Land is still hard to acquire: Getting industrial land cleared and ready remains one of the biggest headaches for a company trying to set up operations in India.
    • Labour reforms are stuck: The 2020 labour codes still haven’t been fully implemented — six years on, that delay itself signals unpredictability to investors.
    • Clearances are slow and scattered: Investors dealing with multiple states and departments face a much slower, less predictable path than in Vietnam or Thailand’s single-window systems.
    • Manufacturing FDI is still thin: Real, factory-building manufacturing investment is only about 10.6% of effective inflows — most FDI still goes into services and IT, which don’t need to “stay put” the way a factory does.
    • Domestic capital markets aren’t deep enough: When a foreign investor wants to exit, there often isn’t enough Indian institutional money ready to buy them out — so the money leaves the country instead of just changing hands within it.

    5. What Should India Do to Lift Net FDI?

    • Fast-track approvals with fixed timelines — a genuine time-bound single-window clearance for priority projects, not just a policy promise.
    • Finish the labour code rollout — closing a six-year-old gap matters as much for investor confidence as the content of the codes themselves.
    • Make industrial land ready in advance — pre-cleared land banks and plug-and-play parks, the way parts of Gujarat and Tamil Nadu already do it, need to become the norm across states.
    • Put real muscle behind manufacturing, not FDI in general — sharper, PLI-style incentives specifically for semiconductors, electronics and clean-energy manufacturing.
    • Deepen India’s own capital markets — so that when foreign investors exit, Indian institutions can absorb the stake instead of the money leaving the country.
    • Make Centre-State coordination visible — one senior point of accountability per big project, so approvals don’t get lost between jurisdictions.

    The Bottom Line

    India doesn’t have an attraction problem — the last decade of record gross FDI proves that. What it has is a retention problem: turning a strong “come invest here” pitch into an equally strong “stay and build here” outcome. Fix the handful of structural issues above, and the gap between the $95 billion headline and the $7 billion reality starts closing on its own.

    Sources: DPIIT FDI Factsheets · RBI Bulletin · PIB · Ministry of Finance (Lok Sabha reply) · Economic Survey 2025-26 · CareEdge Ratings · IBEF. Figures compiled and cross-checked as of 22 August 2026.