ADITI SINGH

FDI IN

RETAIL

SECTOR

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ADITI SINGH

FDI IN RETAIL

POLICY

PERSPECTIVE

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ADITI SINGH

An investment is..

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The commitment

of money or capital to

purchase financial

instruments or assets in

order to gain profitable

returns.

ADITI SINGH

An investment becomes foreign investment when..

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Investment done by citizens and government of one country (home country) invest in industries of another country (host country).

Foreign

Investment

through

Foreign Direct Investments

Foreign Instituti

onal Investor

s

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FDI Routes

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Automatic Route Government

No permission required

Approval /License required.

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FDI Policy Initiatives

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• 1991- FDI allowed selectively up to

51% in priority sectors.

• 1997-FDI allowed up to 100% in

sectors like mining, manufacturing.

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• 2000-06 FDI allowed up to 100% in

specified sectors.

FDI limits increased.

Procedures further simplified

• The top 3 Indian Regions attracting the

highest FDI.

Mumbai, Delhi and Karnataka.

Account for nearly 62% of the

total FDI.

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Modes of FDI

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By Targe

t

•Mergers and Acquisitions•Horizontal FDI•Vertical FDI. *Backward Vertical FDI *Forward Vertical FDI

By Motiv

e

•Resource-Seeking•Market-Seeking•Efficiency-Seeking•Strategic-Asset-Seeking

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Introduction to Modern Retail

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Barter system

Weekly marketVillage melas

Kirana StoresConvenience store

Government Stores

Super marketsHyper marketsMallsBrand outlets

ADITI SINGH

FDI Policy in Indian Retail Sector

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Single Brand

Retailing

• 51%

Cash and

Carry Model

• 100%

ADITI SINGH

Why Global Retailers Look Up to India?

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Incentives attract FDI.

Market size and potential are sufficient

inducers.

Tax breaks, import duty exemptions,

land and power subsidies, and other

enticements.

ADITI SINGH

Comparison of FDI Inflow.

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FDI inflows from August 1991 to

April2010 were $134.6 billion.

FDI inflows from 2000-10 crossed

$300 billion

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RETAIL INDUSTRY :

AN OVERVIEW

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Indian Retail SectorGRDI Position : 3rd

Size : $ 400 billion

Growth Rate : 13%

GDP contribution : 12%

Major sector : Food and

Grocery

Employment : 2nd largest

industry (35.06

million)

Types: Organized ( 5%)

Unorganized ( 95%)

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Emerging Trends

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• Corporates are increasingly coming

into this sector.

• Demand of branded goods on a large

scale.

• Demand of new and varied products.

• High quality product is preferred .

• Varied window display.

• E-tailers increase the presence.

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Segmentation

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Retail Segment

Percentage holding in sector

Major retailers

Food and grocery 63% Reliance fresh, Café brio, food bazaar

Clothing, textile and fashion

9% Westside, shoppers stop, globus

jewellery 5% Tanishq

Catering services 5% IRCTC

Consumer durable 4% Viveks, vijay sales, Croma

pharmaceuticals 4% Piramal group

Entertainment 3% Bowling co.,

Furnishing, utensils 3% Hometown, Tangent Concept

Mobile handsets 2% The mobile store,

ADITI SINGH

FDI POLICY IN

RETAIL

OPPORTUNITIES

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ADITI SINGH

•Increase in consumer

class.

Consumer class

will grow from 50

million at present

to 583 million by

2025.

With more than 23

million people

taking their place

among the world’s

wealthiest citizens.

Consumer Class Shift

Upper

class

Middle clas

s

Lower

class

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ADITI SINGH

•Employment generation.

Second-largest employer

after agriculture.

Retail trade employing

35.06 million.

Wholesale trade generating

an additional employment of

5.48 million.

Employment Generation

Additional 1.6

mn jobs .

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ADITI SINGH

•Technology Better use of

resources and goods.

Wastage and Storage

problems will be resolved.

Efficient logistics,

production, and distribution

channels.

Digital records.

Technology

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Infrastructure

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ADITI SINGH

•Rural market.

Robust Consumption.

70% Indian households.

2/5 of the country’s total

consumption pie.

Accounts to 45% of GDP.

Rural Market

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ADITI SINGH

Fiscal Growth

Evergreen Need

•FDI in Retail sector will resolve problems regarding foreign exchange in India.

•The life-long basic needs will keep on driving the Retail Industry.

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