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FDI in Indian Retail

Date post:08-May-2015
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Indian retail is booming. The future depends on the conditions governing the inflow of FDIs into single-brand and multi-brand retail. Read on to know more.
  • 1.Indias First Retail B SchoolPartners & Associations: facebook.com/GreatIndiaBSchool: linkedin.com/GreatIndiaBSchool: [email protected]: 0841-8325722FDI (Foreign Direct Investment ) in Retail

2. Indias First Retail B SchoolIndian Retail Sector 2012 India ranked fifth in the Global Retail Development Index 2012 (ATKearney, leading global management consulting firm) An estimated 35 million people are employed in the Indian retailindustry, which makes it the second largest employer in the country(Bisaria, 2012) 3. Indias First Retail B SchoolIndian Retail Sector Growth Indias retail industry, which currently accounts for around 15% of thenations GDP, is expected to grow almost three times to $660 billion by2015 India, with its exploding population has always been an exciting market formultinational companies, which have been eyeing to invest in the Indianretail sector for years 4. Indias First Retail B SchoolShare of Organized Retail0102030405060708090US Japan China IndiaContribution of Organized Retailing in the Retail Sector by CountrySource: EconomyWatch 5. Indias First Retail B SchoolFDI: The BackdropThe Government of India denied foreign direct investment both insingle-brand and multi-brand retailingThe Indian government announced the opening of FDIs both tosingle and multi brand retail sectorsThe Ministry of Commerce and Industry was seeking cabinetapproval for allowing 51% FDI in multi-brand retail trading and forincreasing the FDI limit in single-brand retail trading from 51% to100%The cap on FDI in single-brand retail was finally lifted to 100%This allowed foreign single brands, like Louis Vuitton, Gucci andAdidas, to get full control on their retail operations inIndia, subject to the condition that they should source 30% oftheir goods from IndiaUntil 2006Nov 2011Jan 10, 2012 6. Indias First Retail B School0510152025Penetration of Organized Retail Across Categories in the Indian Retail SectorSource: Indian MirrorOrganized Retail Penetration Across Categories (in %) 7. Indias First Retail B SchoolTerms and ConditionsMinimum limit for FDI in the countrys multi-brand retail sectorMinimum population of the city in which investment in multi-brand retail is allowedMinimum sales to be made to small retailersMinimum value of manufactured items procured that should besourced from small and medium enterprises in IndiaFDI in retail is subject to the state governments permission.$100 million1 million30 percent30 percent 8. Indias First Retail B SchoolHow FDI in Retail May Benefit IndiaIndian farmers get only around 30-35% of the ultimate retailprice. The rest is consumed by middlemen, wholesalers &retailers. After the opening of FDIs, retail giants willpurchase goods directly from the farmers, who will receive amuch better price for their products.A huge amount food grains and vegetables go waste due tothe lack of infrastructure and proper storage systems.Foreign direct investment in multi-retail is expected tosignificant reduce this wastage.FDI in retail is likely to create about 10 million jobs in thespan of a decade (Indian Staffing Federation report, Sept2012). Over these years, there would be 4 million direct jobs& about 5 million indirect jobs created in the Indianeconomy.FDI in retail will benefit Indian consumers with a wide choiceof brands and products.Benefit to FarmersNew EmploymentBenefit to ConsumersReduced Food Wastage 9. Indias First Retail B SchoolFDI in Retail: What are the Concerns?Retail giants like Wal-Mart, Carrefour and Tesco will quite obviouslyoutperform these traditional Kirana stores in terms ofinfrastructure, product range, quality of service, and price range.As a result, a lot a people who are dependent on earning fromthese stores are expected to lose jobs.Impact onKirana StoresAccording to an article by journalistBhavdeep Kang published by Rediff Businesson November 25, 2011, Global retail giantsare highly capital intensive and create fewerjobs. A single Wal-Mart store could put tensof thousands of mom and pop stores out ofbusiness -- as it did in the US -- whilegenerating perhaps 3,000 jobs. 10. Indias First Retail B SchoolFDI in Retail: What are the Concerns?A major concern is that opening FDI in retail maycause huge price hikes in the long run. Globalretail giants will reduce the price of theirproducts initially in order to capture the retailmarket. Once they gain a foothold in the Indianretail market, they may significantly increase thecost of goods.CPI (M) Politburo said in a statement onSeptember 21, 2012, By this policyannouncement, Manmohan Singh governmenthas taken the single biggest step of destroyingthe livelihood of the largest number of peopleengaged in retail trade in India.Inflation in the Long RunThreat of Unemployment 11. Indias First Retail B SchoolFDI in Retail: The China ExperienceChina is an Asian nation with high population and traditionalindustries, much like India. While the concerns surrounding the influxof FDI in multi-brand retail are valid, Chinas experience provesotherwise.Global retail giants like Wal-Mart entered the Chinese market in 1996.Have a look at the statistics till now: Organized retailing comprises only 20% ofthe countrys retail market The countrys employment in the retailindustry has grown from 4% of the totalworkforce in 1992 to 7% in 2007 China also witnessed an increase ofaround 30% in the number of traditionalretails between 1996 and 2001 12. Indias First Retail B SchoolAbout GREAT India B SchoolGREAT India is the first retail focused business school in IndiaThe courses offered at GREAT India B School are: PG Diploma inRetail Management, PG Diploma in Retail Entrepreneurship, PGDiploma in Visual Merchandising and Store Design, MBA (withspecialization in retail), BBA (with specialization inretail), BCom(Hons) and BA(Hons).RAI - Retailers Association of India, SCAI Shopping CentersAssociation of India. Close ties with companies in India.UEL - University of East London, ARC - Australian Retail College.Close ties with companies in Singapore and Dubai.1st Retail B SchoolCourses OfferedIndustry AffiliationsForeign Affiliations 13. Indias First Retail B SchoolAbout GREAT India B SchoolInternational retail gurus and leaders from academia teach at ourcampuses. Great opportunity to gain insight from managementcoaches from across the globe.Modern infrastructure - wi-fi enabled campus and well stockedlibrary. Interactive teaching methods followed.Workshops, seminars and industry visits to aid learning.Campuses at Hyderabad & Lavasa (near Pune). Sprawlingcampuses, with hostel, cafeteria, gym, sports facilities (cricketpitch, tennis court, golf course, jogging track, etc)International FacultyLearning AidsCampus Locations 14. Indias First Retail B SchoolContact GREAT India B School?S-21/a, Gundlapochampally,Medchal MandalR R DistrictSecunderabadAndhra Pradesh 501401Phone No: 0841-83257223rd floor, Belvedere,Raj Bhavan Road,SomajigudaHyderabad 500082Phone No: 8008104496/8008900317Hyderabad CampusHyderabad OfficeInformation Centre80 Event Centre StreetPost Mose, DasveLavasa, Pune- 412107Maharashtra, IndiaPhone No: [email protected]://www.greatindiabschool.edu.in/For Retail Management courses contact:[email protected] No: 09650274177Lavasa CampusFor InformationAdmission Related

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