FDI my.docx

8/16/2019 FDI my.docx

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NATIONAL CONFERENCE

ON

Organised By:

Gujarat Arts & Commerce College, Morning,

Ahmedabad

Paper Presented On:

Foreign Direct Investment in India with Special Reference to

Retail Sector

Submitted By:

egha !" #hatt

Assistant $rofessor

N" C" #odiwala %

$ri" "C" Desai Commerce College&

Ahmada'ad"

Email address( 'hattmegha))*gmail"com

o'" No" ( )+,-.+/.0)

mailto:[email protected]:[email protected]


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Foreign Direct Investment in India with Special Reference to

Retail Sector

A'stract

ndia!s retail sector encompassing "ood & grocery, apparels & accessories, "oot#ear, electronics,

beauty products, je#ellery, "urniture & "urnishings segments is primarily unorgani$ed #ith only a

marginal percentage o" the sector being organi$ed% he unorgani$ed retail sector comprises o" small

'mom & pop! stores ()irana shops* and general stores% Gi+en ndia!s gro#ing per capita income and

disposable income in the middle class in the last decade, domestic industry in+ested huge amounts o"

money in organised retail +entures under +arious models such as hypermaret, supermaret,

department stores, and moderni$ed retail stores% he domestic players engaged in organi$ed retail

include -eliance .resh, Big Ba$aar, Spencers in "ood & grocery segment/ Croma, -eliance 0igital in

electronics segment/ Pantaloon, Shoppers Stop, Pro+ogue, 1ills 2i"estyle in apparels segment%

he in+estment by domestic industry has, ho#e+er, "ocused primarily on "ront3end retail units #hile

signi"icant in+estment in the bac3end in"rastructure, #hich is necessary "or the de+elopment o" the

integrated retail chain, is lacing% Being an emerging maret #ith a enormous consumer base (both

rural and urban*, ndia o""ers immense opportunity to the "oreign in+estors% t is estimated that

organi$ed retail #ill gro# by about 4S5 67 billion and unorgani$ed retail by about 4S 5897 billion

o+er the net ; years%

Cs in retail #ould

bring about three pi+otal changes3modern technology, better transparency in dealings and sharing

best practices in long run% his article presents an o+er+ie# o" retail trade in ndia in the #ae o" the

country!s ne# policy that #ill allo# "oreign capital in multi3brand retailing and single brand

retailing% t discusses +arious ad+antages and disad+antages o" "oreign direct in+estment (.0* in the

retail sector%?

1e2words( .oreign direct in+estment (.0*, -etail Sector, Single brand retailing and multi brand

retailing, Ad+antages and disad+antages o" .0 in -etail sector in ndia, S1O analysis%


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INTROD3CTION

.0 (.oreign 0irect n+estment* is a process #hich enables the residents o" one country to directly

in+est their "unds in another country and ac@uire o#nership o" assets and eercise control o+er the

in+estment in terms o" production, management, distribution, e""ecti+e decision maing, employmentetc%“FDI is an international financial flow with the intension of controlling or participating in the

management of an enterprise in a foreign country.” .oreign in+estment is a means o" maing

"oreign resources a+ailable to a de+eloping country% Such in+estments can tae place "or many

reasons, including to tae ad+antage o" cheaper #ages, special in+estment pri+ileges (e%g% ta

eemptions* o""ered by the country%

.oreign 0irect n+estment (.0* as de"ined in 0ictionary o" =conomics is in+estment in a "oreign

country through the ac@uisition o" a local company or the establishment there o" an operation on a

ne# site% n short .0 re"ers to capital in"lo#s "rom abroad that is in+ested in or to enhance the

production capacity o" the economy% here are t#o main types o" "oreign in+estment:

8% $ortfolio investments 3 Port"olio in+estments are in+estments in purely "inancial assets such as

bonds, stocs denominated in national currency% Port"olio or "inancial in+estments tae place

primarily through "inancial institution such as bans in+estment "unds%

% Direct investments 3 hese in+estments are the real in+estments in "actories, capital goods, land

and in+entories #here both capital and management are in+ol+ed and the in+estors retains control

o+er use o" the in+ested capital%

.oreign direct in+estment (.0* is in+estment directly into production in a country by a company

located in another country, either by buying a company in the target country or by epanding

operations o" an eisting business in that country%

-etail sector is one o" the biggest supports o" the ndian economy and accounts "or 8 percent o" its

G0P% he ndian retail maret is estimated to be 4S5 ;7 billion and one o" the top ten retail marets

in the #orld by terms o" economic +alue% ndia is one o" the "astest emerging retail marets in the

#orld, #ith 8% billion people%

n simple #ords retailing is maing the "inal product directly a+ailable to the "inal consumers o" the

product or a sale to the ultimate consumer% -etail can also be de"ined as a lin or inter"ace bet#een

bul producers and indi+idual consumers #ho purchase "or "inal consumption% -etail is the last step

in the process o" distribution o" merchandise%

Manu"acturer Agent 1holesaler -etailer Consumer


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CLASSIFICATION OF INDIAN RETAIL IND3STR!(

odern Format Retailers Traditional Format Retailers Large Indian Retailers

Supermarets (.ood #orld* )iranas: raditional mom and pop stores

ypermarets

ypermarets (Big Ba$aar* Street marets Big Ba$aars

0epartmental Stores(Shoppers! stop*

=clusi+eDMultiple BrandOutlets

Giants

Specialty Chains ()=A* 0epartmental stores

Company o#ned companyoperated stores

2i"estyle

Shoppers stop

rent

DI4ISION OF RETAIL IND3STR!(

he retail industry is mainly di+ided into t#o parts #hich are as "ollo#s:

Organi5ed Retailing 3 rading acti+ities #hich are undertaen by licensed retailers, that is, those

#ho are registered "or sales ta, income ta, etc% are re"erred to as organi$ed retailing% Corporate

baced hypermarets and retail chains, and also the pri+ately o#ned large retail businesses are

included in this%

3norgani5ed Retailing 3 raditional "ormats o" lo# cost retailing, "or eample the local irana

shops, o#ner manned general stores, paanD beedi shops, con+enience stores, hand carts and pa+ement

+endors etc is no#n as unorgani$ed retailing%

FDI Share of organi5ed sector in selected co6ntries"Co6ntr2 Share of organi5ed Sector

789

4% S% A% 6

4% )% 67

Eapan FF

-ussia F

ndia 7;

(Source: Planel -etail & echnopa Ad+iser P+t% 2td%*

$ro:ected Si5e of the Organi5ed Retail Ind6str2

!ear Increase in si5e 7in crores9

776 9F

787 8H6

78 F87

7 8HF6

FDI IN INDIA


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;istor2

ill recently, .0 in retail (ecept under single3brand product retailing, #ith conditions* #as not

allo#ed in ndia% n other #ords, "or a company to be able to get "oreign "unding, products sold by it

to the general public needed to be o" a Isingle3brandI% he go+ernment has no# opened a gate#ay "or

"oreign "unding into the sector% n 899H, .0 in cash3and3carry (#holesale* #ith 877J o#nership#as allo#ed under the Go+ernment appro+al route% t #as brought under the automatic route in 77F%

8J in+estment in a single3brand retail outlet #as also permitted in 77F% .0 in multi3brand

retailing #as prohibited in ndia% his #as changed to increases .0 in single3brand retail to 877J

#hile creating a path "or .0 in multi3brand retail to the tune o" 8J% Cities #ith populations o"

more than 87 million are eligible "or this% 4nder MB- 8J #as allo#ed in >o+ember 788 but #as

put on hold because o" se+ere opposition% n Mid September 78 .0 MB- #as allo#ed to the

etent o" 8J%

Strategi$ing an entry into a "oreign maret, .oreign 0irect n+estment (.0* is an ad+anced strategy

"or companies that #ish to operate on a global basis #ith an entrenched "ootprint% t re"ers to

in+estment to ac@uire a lasting interest in an enterprise operating in an economy other than that o" the

in+estor% =ntry through .0 "or corporate results in "ootprint #hich gi+es a degree o"

in"luenceDcontrol o+er the management o" the enterprise relati+e to the structure created% t usually

in+ol+es trans"er o" management sills, technology, systems, processes and epertise% .or a country

it is a sturdy and till date desirable source o" capital in"lo#s as opposed to . "lo#s #hich include

'hot money!% .0 being a "eature o" capital control are generally applicable in countries pro"essing

capital control and the regulation +aries "rom country to country%

.oreign n+estment in ndia is go+erned by sub3section (* o" section F o" the .oreign echange

Management Act,8999 read #ith noti"ication >o% .=MA 7D7773 -B dated May , 777% he

Ministry o" Commerce and ndustry, Go+ernment o" ndia is the nodal agency "or monitoring and

re+ie#ing the .0 policy on continued basis and pre+ails in its sectoral in+estment policyD sectoral

e@uity cap% he .0 policy is noti"ied through Press >otes by the Secretariat "or ndustrial Assistance

(SA*, 0epartment o" ndustrial Policy and Promotion (0PP*%he "oreign in+estors are "ree to in+est

in ndia, ecept "e# sectorsDacti+ities, #here prior appro+al "rom the -B or .oreign n+estment

Promotion Board ('.PB!* #ould be re@uired%

he 0epartment o" ndustrial Policy & Promotion, Ministry o" Commerce and ndustry, Go+ernment

o" ndia has released the Consolidated .oreign 0irect n+estment Policy, 78 (


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retail, po#er echanges/ asset reconstruction companies (A-Cs*, broadcasting, ci+il a+iation, and

non3baning "inancial companies% erein as the recent earlier policy

FDI CAN COE INTO INDIA IN T


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brands% t implies that a retail store #ith "oreign in+estment can sell multiple brands, under one roo",

as opposed to a single brand retailing in #hich a single brand is sold across all outlets% Say "or

eample >ie, -eebo stores%

The present da2 evol6tion of norms for retail in India ma2 'e reads as(• 89931orld rade Organi$ation!s General Agreement on rade in Ser+ices, #hich includes both

#holesale and retailing ser+ices, came into e""ect%

• 899H3.0 in cash and carry (#holesale* #ith 877J rights allo#ed under go+ernment appro+al

route%

• 77F3.0 in cash and carry (#holesale* brought under the automatic route% 4p to 8J

in+estment in a single brand retail permitted, subject to Press >ote (77F Series*%

• 7883877J .0 in single brand retail permitted%

• 7838J .0 in multi3brand retail permitted%

he go+ernment has currently appro+ed 877J .0 in Single Brand -etail under the Go+ernment

appro+al route subject to certain conditions%

t is said that ndia is a land o" -etail democracy% he ndian retail industry is generally di+ided into

t#o major segments K organised retailing and unorganised retailing % Gi+en the demographics, rate o"

G0P gro#th, consumer spending "or many, ndia is an ine+itable destination "or entities ha+ing

global "ootprint% According to the 78 A%% )earney Global -etail 0e+elopment nde (G-0*

report, #hich is an annual study that rans the top 7 de+eloping countries "or retail epansion

#orld#ide, rans si Asian Countries including ndia on the G-0 78 report% ndia rans 8;th on

the G-0 78 report% he report says that consumer spending gro#th, continued adoption o"

modern retail and solid economic "undamentals eep Asian marets attracti+e to global retailers%

he ndian retail maret is estimated to eceed 4S5 H7 billion by 78, according to the ndia

-etail -eport 78 (-S -esearch*, presenting a strong potential "or "oreign retailers planning to

enter ndia%

.or the mandate to permit .0 in MB- and #ith the "uror entire nation as #ell as the political

parties did not epect the ndian Go+ernment to permit 8J .0 by "oreign multi brand retailers%

ndia ho#e+er, too sa"er and slo#er steps to#ards .0% t permitted 8J

FDI in 6lti?'rand retail trading& with caveats& the2 are as follows(

8% here should be a minimum in+estment o" 4S 5 877 million by the "oreign in+estor%% 7J in+estment is to be in bacend in"rastructure de+elopment% Bacend in"rastructure includes

acti+ities lie processing, manu"acturing, distribution, design impro+ement, @uality control, pacaging, logistics, #arehousing etc%


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% 7J o" all ra# materials ha+e to be procured "rom ndia!s small and medium industries, #hich

ha+e a total in+estment in plant & machinery not eceeding 4S 5 8%77 million;% he permission to set up malls should be gi+en to only those cities #ith a minimum population o"

87 lahs%% he go+ernment has the "irst right to procure material "rom "armers%

F% Products should be sold under same brand internationally%H% .oreign in+estors should be the o#ner o" the goodsL (Eust chec it should be brands*%6% he abo+e policy is an enabling policy only and the State Go+ernmentsD4nion erritories #ould

be "ree to tae their o#n decisions in regard to implementation o" the policy%

Post the release o" 78 circular 8the 0epartment o" ndustrial Policy and Promotion (0PP* has

brought out certain clari"ications on .0 policy into MB-% On the issue relating to sourcing, the

go+ernment has clari"ied that sourcing pertains only to manu"actured and processed goods and that it

applies only in relation to "ront3end stores% .urther, the term 'small industry! has been eplained%

As regards bac end in"rastructure, it is clear that ac@uisition is not an option and the retail entity

#ould necessarily ha+e to in+est into green3"ield assets% Similarly, "ront3end stores #ould need to be

additional units and ac@uisition o" eisting stores is not permitted%

Bac3end in"rastructure in non3.0 permitting States #ould also be counted as compliance #ith the

conditions "or .0 in MB- under the .0 Policy Circular% Additionally, eisting in+estments by

in+estors into in"rastructure or ser+ice companies #ill not be accumulated or be counted to#ards

in+estment in bac3end in"rastructure%he #holesaling entity and the retailing entity should be di""erent units% he entity carrying on 'cash

and carry business! #ill not be allo#ed to enter into retailing e+en #here all conditions "or .0 are

satis"ied% >o "ranchising #ould be allo#ed% All "ront end stores #ould ha+e to be MB- company

o#ned and company operated only%

Clarification in relation to State $olic2

Any amendment in the .0 policy itsel" #ould "all under the domain o" the Central Go+ernment%

o#e+er, the in+estor #ould be re@uired to comply #ith State la#sD regulations% One #ould thin

such a clari"ication should gi+e "oreign in+estors some relie"%

o#e+er, immediately therea"ter another clari"ication pro+ides that .0 policy in MB- is subject

to the applicable StateD4nion erritory la#sD regulations% he State Go+ernments ha+e the

prerogati+e o" imposing additional conditions accordingly% 1hich is nebulous, 1hat is the

"rame#or #ithin #hich StateD 4nion erritory Go+ernments can impose additional conditionsL 0o

the States ha+e un"ettered discretion in imposing conditionsL he clari"ications #ould seem to

suggest so%


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One o" the most important aspects on #hich clarity is a#aited and has not yet been pro+ided is

'sourcing restrictions among group companies!% he term 'group companies! has been de"ined by

Press >ote o" 78 issued by 0PP on Eune , 78%

The other clarifications that are pending are in relation to(• -e@uirement o" 7J in+estment in 'bacend in"rastructure! #ithin three years o" the "irst tranche

o" .0/ and

• -e@uirement o" 7J sourcing "rom 'small industry!% 1hether sourcing "rom such 'small

industry! can be allo#ed to#ards "ul"illment o" this conditionality, i" it outgro#s, and i" so, till

#hat periodL

Controversies that are feared to emerge with the introd6ction of FDI in #RT(

Iss6e 0( FDI will lead to closing down of small retail stores& leading to 6nemplo2ment(

-etail is a gro#ing sector, there is no empirical data to suggest that small retail stores #ould

collapse, the entry o" pure ndian operati+es did not create such a scenario, neither has such scenario

been seen in e+ol+ed marets as .rance, the policy conditions o" hailand and South A"rica are

di""erent "rom that o" ndia% Organised retail #ill need more #orers and may be an employment

generator and #ould be in larger cities% .urther it is mandatory in the .0 policy 78, that 7J o"

any in+estment o+er a 5877 million #ould be in the bacend in"rastructure #hich ndia lacs #ould

create "urther jobs as #ell as in"rastructure "or de+eloping country lie ndia% t is important to note

here that in many =uropean countries and Eapan, #hich are densely populated #ith high real estate

costs, the small retail stores has thri+ed and "lourished e+en in the "ace o" big retail outlets%

Iss6e ,( The glo'al pla2ers li@e


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comparati+ely smaller, added #ith the disad+antage o" the limited capital that is a+ailable% .0 #ill

not only pro+ide ade@uate capital "or a de+eloping country lie ndia, it #ill also introduce ne#

technology%

Iss6e +( Onl2 foreigners will 'enefit from FDI( Another misconception, that has propped up #iththe introduction o" .0 is that ndians #ill #or "or "oreign retail companies and all the bene"it #ill

go to them% But #ith only 8J limit in multi brand retail sector, most o" the pro"it #ill remain in

ndia #hich is another ad+antage to our economy% .urther i" .0 is permitted in other arena MB-

cannot be car+ed out%

Iss6e >( Comparing foreign retail companies with East India Compan2( Another strange

contro+ersy that has come #ith .0 is that as =ast ndia Company came as a trader and then captured

ndia, "oreign -etail Companies #ill "ollo# the same policy% t is interesting to note here that South

=ast Asia has long been a "ocal point "or .0 by O=C0 (organi$ation "or economic cooperation and

de+elopment* based "irms% hey e+en attracted in+estments "rom rest o" the O=C0, particularly o"

4nited States and =urope% As a result, in the 8997s South =ast Asia #as collecti+ely among the

#orld!s largest recipients o" .0% So, South =astern tigers e+ol+ed #ith .0, so has upcoming

po#ers as China, it emerged in 8997 as a magnet "or .0 #ith its large and dynamic maret and lo#

cost o" production% t can be "urther said that #ith Current account de"icit and looming ndia!s credit

rating, .0 in"lo#s are a pre"erred route o" "oreign in+estments to hot monies%

AD4ANTAES OF FDI IN RETAIL SECTOR IN INDIA

Go+ernment has encouraged by the economic policy 8998, has adopted retail re"orms mainly as

877J .0 in the retail sector in ndia% t may bene"it by bringing in+estment in complete bacend

in"rastructure and helps rural and agricultural sectors #ith a better go to maret scenario% hey also

sa"eguard the health o" the ndian retail sector against competition "rom the player o" global

economy%

ndia is raned as the third most attracti+e nation "or retail in+estment among 7 emerging marets

#ith domestic companies lie the .uture Group, ata!s 1estside, -eliance .resh, -aheja Group and

Bharti -etail competing "or maret share% Maret liberali$ation so#ing the seeds "or a retail

trans"ormation that #ill bring more M>Cs players and big ndian retail players #hich are looing to

epand their operations #hich include Pantaloon, -eliance, 2i"estyle, .ood #orld, -aymond, itan,

Bata etc% Global player!s access ndia maret through the licenseeD"ranchisee route includes

Mc0onald!s, Pi$$a ut, 0ominos, 2e+is, 2ee, >ie, Adidas etc% here are so many ad+antages o"

.0 in retail sector%


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709 #oost Economic Life( 0ue to "oreign companies entering into retail sector, ne# in"rastructure

#ill be built thereby bolstering the jagging real estate sector% n turn, baning sector #ill also gro# as

the "unds needed to build in"rastructure #ill be pro+ided by bans% A remarable in"lo# o" .0 in

+arious industrial units in ndia has boosted the economic li"e o" country%7,9 o' Opport6nities( t has been estimated according to go+ernment, that approimately ten

million jobs #ill be created mostly in retail and real estate sectors%

7/9 #eneficial for Farmers( By .0, "armers might get contract "arming, #here they #ill be able to

supply an organi$ed retailer based upon demand and #ill get a better price/ easy credit a+ailability

#ill help to tacle the problem o" "armer suicides%

7+9 #eneficial for cons6mers( Consumers #ill get +ariety o" good @uality products at lo# prices

compared to maret rates and #ill be able to choose "rom +arious international brands at one place%

7>9 Increase level of competition( .0 increases le+el o" competition in maret% hey ha+e to

impro+e @uality o" products and ser+ice in order to stay in maret% hey enter into ndian maret

through Eoint +enture and collaboration

7-9 Infrastr6ct6re facilities( Allo#ing .0 might help ndia ha+e better logistics and storage

technologies resulting in a+oiding #astage% 0ue to .0 "oreign companies #ill in+est around 5 877

million in ndia% hereby, in"rastructure "acilities, re"rigeration technology, transportation sector #ill

get a boost%

79 Cheaper $rod6ction facilities( .0 #ill assure operations in production cycle and distribution%

0ue to economies o" operation, production "acilities #ill be a+ailable at a cheaper rate and thus

resulting in a+ailability o" +ariety products to the ultimate consumers at a reasonable and cheaper

price%

7.9 Availa'ilit2 of new technolog2( .0 allo#s trans"er o" sills and technology "rom abroad%

mpro+ed technology in the area o" processing, grading, handling and pacaging o" goods and "urther

de+elopments in areas lie electronic #eighing, billing, barcode scanning etc%

7)9 aim6m Opport6nit2( .0 norms #ill open up strategic in+estment opportunity "or global

retailers, #ho ha+e been #aiting to in+est in ndia% his may ha+e a signi"icant impact on the current

arrangement o" "oreign players% =mployees are #ell3+ersed #ith globally +alued sills%

70,9 Other 'enefits(

• n"lation is controlled%

• a re+enue collected by the go+ernment can be used "or in"rastructure de+elopment%

• ndia #ill become more integrated #ith regional and global economies in terms o" @uality

standards and consumer epectations%

• ncreased e""iciency


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• Cost reduction

• mplementation o" in retail%

DISAD4ANTAES OF FDI IN RETAIL IN INDIA

.0 "eels that liberali$ation #ould endanger retail sector and mainly a""ect the small retailers,

"armers and consumer and gi+e rise to monopolies ad+ersely a""ect the pricing and a+ailability o"

goods% he entry o" large global retailers such as 1al3Mart #ipes out local shops and millions o"

jobs% here are so many disad+antages o" .0 in retail sector%

709 Impact on the 1irana shops( he unorgani$ed maret pro+ides the second largest employment

opportunities to %9 million people% t is argued that opening .0 in retail sector #ill ha+e an impact

on sales in the unorgani$ed sector% As a result o" this, employment pro+ided by the unorgani$ed

sector #ill be a""ected% Small retailers and other ')irana Stores! may close do#n%

7,9 Limited Emplo2ment opport6nities( t is said that .0 might pro+ide employment

opportunities, but it is argued that it cannot pro+ide employment opportunities to semi3illiterate

people% his argument gains more importance because in ndia, large number o" semi3illiterate

people is present%

7/9 Fear of lowering of prices: here is a "ear that allo#ing .0 in retail #ould result in lo#ering o"

prices, as .0 #ill bring in good technology, supply chain etc% " prices are lo#ered, then it #illlo#er the margin o" unorgani$ed players also% As a result o" this, the unorgani$ed maret #ill be

a""ected% his in turn #ill ha+e an impact on the employment opportunities pro+ided by the

unorgani$ed maret%

7+9 .0 in retail #ill drain out the country!s share o" re+enue to "oreign countries, #hich may cause

negati+e impact on ndia!s economy

7>9 .ears that domestic organi$ed retail sector might not be competiti+e enough to tacle

international players might not only result in loss o" maret share "or them but in closure o" their

units%

7-9 here is a possibility o" small business o#ners and #orers "rom other "unctional areas, as lot o"

people are in+ol+ed in unorgani$ed retail business, may lose their jobs%

79 Supermarets #ill establish their monopoly in the ndian maret% 0ue to supermarets "ine tuning

and higher accessibility they #ill be able to buy goods at lo#er prices and there"ore #ill be able to

sell at lo#er prices to consumers% his #ill result in closing o" many small retailers%

7.9 Other disadvantages(

• Gi+ing rise to cut throat competition rather than promoting incremental business%

• Promoting cartels and creating monopoly%


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• ncrease in real estate prices%

• Pro"it distribution, in+estment ratios are not "ied%

• t can epand only by destroying traditional retail sector%

• t is true that it is in the consumer!s best interest to obtain his goods and ser+ices at the lo#est

possible price% But collecti+e #ell being should tae precedence%

Son a+ailability o" land spaces at prime slots

• igh o+erhead and labor costs

Opport6nities

• 2i"estyle changes or status consciousness

• -eady a+ailability o" real estate in smaller to#ns

• mpro+ed sourcing options

• ncreasing time pressure "or ndian #oman

• .ocus on more @uality, +ariety and easy a+ailability under one roo"

• ncrease in disposable income

• .eel and touch shopping

• >o "oreign competition


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• ncreasing media eposure to brand

• t can become one o" the largest industries in terms o" numbers o" employees and

establishments%

Threats

• -oadside bargains

• Other retail outlets

• Personal and homely attention at smaller shops

• A+ailability o" credit at other retail outlets

• Competition "rom unorgani$ed sector

• Go+ernment policies and regulations

• 2ac o" ade@uate in"rastructure and inade@uate in+estment

• 2ac o" uni"orm ta system "or organi$ed retailing%

• 2abor rules and regulation are also not "ollo#ed in the organi$ed retails%

CONCL3SION

he concept o" .0 is no# a part o" ndia!s economic "uture but the term remains +ague to many,

despite the pro"ound e""ects on the economy% .0 means .oreign 0irect n+estment in #hich "oreign

in+estors can mae in+estment in ndia% .0 in ndia!s retail sector has both ad+antages as #ell as

disad+antages% t is ad+antageous to the go+ernment as the ta re+enue collected can be used "or

in"rastructure de+elopment, not only this it #ill be bene"icial to the "armers and consumers also to a

large etent% t #ill also pro+ide job opportunity #hich is a crucial "actor "or de+eloping countries%

On the other hand it #ill cause cut throat competition specially in the organi$ed retail sector

promoting cartels, creation o" monopolies, increase real estate prices etc% ncreased competition #ill

be bene"icial as e+eryone #ill try to mae its product better "rom others to increase their pro"its

#hich #ill ultimately result in @uality products at reasonable prices% Opponents o" .0 in retail arguethat it #ill bring major job losses but "ranly it #ill cause only redistribution o" jobs #ith some

drying up (lie middlemen* and ne# ones sprouting up% he argument that "armers #ill su""er due to

creation o" monopolies is #ea% Stores lie 1al3Mart and esco are +ery "e#, on the outsirts o"

cities (to eep real estate costs lo#* and can!t intrude in the local territory o" local iranas%

.0 is ad+antageous and disad+antageous both but it depends only on the #ay #e implement it in

our country so that .0 does not ha+e a bad impact on ndiaIs Business% Go+ernment must mae

some rules so that it is bene"icial "or ndian maret retailers and the customers get the re@uired

bene"it "rom this% May be by this ndian economy may rise #hich is help"ul in the employment "ield%

he eperience o" success"ul AS=A> countries amply demonstrates ho# .0 can play a leading role


15/15

in bringing about rapid, eport3led gro#th% n the retail sector changes are +ery "re@uent there"ore

sur+i+al in retail #ill depend upon the ability to adapt to change% he ndian retailers need to de+elop

proper systems and processes eeping the uni@ue nature o" the country in mind% .0 #ould lead to a

more comprehensi+e integration o" ndia into the #orld#ide maret and as such, it is imperati+e "or

the go+ernment to promote this sector "or the o+erall economic de+elopment and social #el"are o" the country% So .0 should be implemented in a limited #ay so that it releases a good impact on

ndia maret% " done in the right manner, it can pro+e to be a boon and not a curse%

REFERENCES(?

• nternational Eournal o" -esearch in =conomics & Social Sciences

http:DD###%euroasiapub%org

•

Global research analysis, international journal, +olume , issue 8, Eanuary 78

• act"ul Management -esearch Eournal, ol% 8 , ssue% , .eb 78

• .oreign 0irect n+estment in ndia, ndranil 0eb, .eb 78

• AS=C 4ni+ersity Eournal ol% Dssue Sep% 78

• nternational Eournal o" Ad+ance -esearch in Computer Science and Management Studies,

olume 8, ssue ;, September 78

• .oreign direct in+estment in multi3brand retail: A hope in abeyance, Ashutosh 2imaye

4pdated 76 Ean 78;,
http://www.euroasiapub.org/http://www.euroasiapub.org/

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