Fdi

.

Presented to: Presented by:Prof.Rupesh Gupta Rahul Roy

WHAT IS FDI?

Foreign direct investment (FDI) is investmentdirectly into production in a country by a companylocated in another country,

By buying a company in the target countryBy expanding operations of an existing business in

that country It is cross border investmentWhere foreign assets are invested into the

organizations of the domestic market excluding theinvestment in stock.

An IntroductionForeign direct investment (FDI) is investmentdirectly into production in a country by a companylocated in another country,

By buying a company in the target countryBy expanding operations of an existing business in

that country It is cross border investmentWhere foreign assets are invested into the

organizations of the domestic market excluding theinvestment in stock.

.

Avoiding foreign government pressure for local production. Circumventing trade barriers, hidden and otherwise. Making the move from domestic export sales to a locally-

based national sales office. Capability to increase total production capacity. Opportunities for co-production, joint ventures with local

partners, joint marketing arrangements, licensing, etc;

Why is FDI important for any consideration of going global?

The simple answer is that making a direct foreign investment allowscompanies to accomplish several tasks:

Avoiding foreign government pressure for local production. Circumventing trade barriers, hidden and otherwise. Making the move from domestic export sales to a locally-

based national sales office. Capability to increase total production capacity. Opportunities for co-production, joint ventures with local

partners, joint marketing arrangements, licensing, etc;

.

RETAIL INDUSTRY

The Retail sector of India is vast, and has hugepotential for development, as the majority of itsconstituents are un-organized. The retail sectorof India contributes about 15% to the nationalGDP, and employs a massive workforce of it,after the agriculture sector.

Retail Sector in India:

The Retail sector of India is vast, and has hugepotential for development, as the majority of itsconstituents are un-organized. The retail sectorof India contributes about 15% to the nationalGDP, and employs a massive workforce of it,after the agriculture sector.

.

RETAIL INDUSTRY

The retail sector of India handles about $250billion every year, and is expected by veteraneconomists to reach to $660 billion by the year2015. The business in the organized retail sectorof India is expected to grow at the rate of 15-20%every year, and can reach the level of $100billion by the year 2015.


The retail sector of India handles about $250billion every year, and is expected by veteraneconomists to reach to $660 billion by the year2015. The business in the organized retail sectorof India is expected to grow at the rate of 15-20%every year, and can reach the level of $100billion by the year 2015.

.

RETAIL INDUSTRY

.

DIVISION OF RETAIL INDUSTRY – ORGANIZED AND UN ORGANIZED RETAILING

Organized Retailing organized retailing refers to

trading activities undertakenby licensed retailers, that is,those who are registered forsales tax, income tax, etc.These include the corporate-backed hypermarkets andretail chains, and also theprivately owned large retailbusinesses.

Un organized Retailing Un organized retailing, on the

other hand, refers to thetraditional formats of low-costretailing, for example, thelocal kirana shops, ownermanned generalstores, paan/beedi shops,convenience stores, hand cartand pavement vendors, etc.

The retail industry is mainly divided into:-

.

Organized Retailing organized retailing refers to

trading activities undertakenby licensed retailers, that is,those who are registered forsales tax, income tax, etc.These include the corporate-backed hypermarkets andretail chains, and also theprivately owned large retailbusinesses.

Un organized Retailing Un organized retailing, on the

other hand, refers to thetraditional formats of low-costretailing, for example, thelocal kirana shops, ownermanned generalstores, paan/beedi shops,convenience stores, hand cartand pavement vendors, etc.

RETAIL INDUSTRY

The Indian retail sector is highly fragmentedwith 97 per cent of its business being run by theUn organized retailers. The organized retailhowever is at a very nascent stage. The sector isthe largest source of employment afteragriculture, and has deep penetration into ruralIndia generating more than 10 per cent ofIndia’s GDP.


The Indian retail sector is highly fragmentedwith 97 per cent of its business being run by theUn organized retailers. The organized retailhowever is at a very nascent stage. The sector isthe largest source of employment afteragriculture, and has deep penetration into ruralIndia generating more than 10 per cent ofIndia’s GDP.

.

RETAIL FORMATS IN INDIA

They are family ownedbusiness catering to smallsections; they areindividually handled retailoutlets and have a personaltouch.

Mom-and-pop stores (Kirana store):

.

They are family ownedbusiness catering to smallsections; they areindividually handled retailoutlets and have a personaltouch.


These are general retailmerchandisers offeringquality products andservices.

Departmental stores:

.

These are general retailmerchandisers offeringquality products andservices.


The biggest form of retailin India, malls offerscustomers a mix of alltypes of products andservices includingentertainment and foodunder a single roof.

Shopping malls:

.

The biggest form of retailin India, malls offerscustomers a mix of alltypes of products andservices includingentertainment and foodunder a single roof.


Are retailers providingonline buying and sellingof products andservices.

E-traders:

.

Are retailers providingonline buying and sellingof products andservices.


These are factory outletsthat give discount on theMRP.

Discount stores:

.

These are factory outletsthat give discount on theMRP.


It is a relatively newentry, in the retail sector.Here beverages, snacksand other small itemscan be bought viavending machine.

Vending:

.

It is a relatively newentry, in the retail sector.Here beverages, snacksand other small itemscan be bought viavending machine.


Small specialty stores thatoffer a variety of categories.They are known as categorykillers as they focus onspecific categories, such aselectronics and sportinggoods. E.g. Selection CentreSports, Strand Book Store

Category killers:

.

Small specialty stores thatoffer a variety of categories.They are known as categorykillers as they focus onspecific categories, such aselectronics and sportinggoods. E.g. Selection CentreSports, Strand Book Store


These are retail chainsdealing in specific categoriesand provide deepassortment. Mumbai'sCrossword Book Store andRPG's Music World are acouple of examples.

Specialty stores:

.

These are retail chainsdealing in specific categoriesand provide deepassortment. Mumbai'sCrossword Book Store andRPG's Music World are acouple of examples.

DIFFERENCES IN SINGLE BRAND RETAIL AND MULTI BRANDRETAIL:

Nike Company opens outlets in Ahmadabad, Bangalore,Delhi and Mumbai selling nothing but Nike Shoes, Nikewrist-watches and Nike t-shirts only.

This is single brand retail. FDI in Single-Brand Retailing was permitted in 2006, to

the extent of 51%. These were mostly outlets for sportswear, luxury goods,

apparel, fashion clothing, jewellery, hand bags, life-styleproducts.

Single Brand Retail:Nike Company opens outlets in Ahmadabad, Bangalore,Delhi and Mumbai selling nothing but Nike Shoes, Nikewrist-watches and Nike t-shirts only.

This is single brand retail. FDI in Single-Brand Retailing was permitted in 2006, to

the extent of 51%. These were mostly outlets for sportswear, luxury goods,

apparel, fashion clothing, jewellery, hand bags, life-styleproducts.

.


But neither the Political parties nor Local Kiranawalaraised any voice against this, why?Because these are ‘high-end’ luxury items for brandconscious upper middle class and rich class people. Itdoesn’t hurt population at large. It was not like peoplewould stop purchasing from local garment store to getNike or Adidas.

Single Brand Retail:

But neither the Political parties nor Local Kiranawalaraised any voice against this, why?Because these are ‘high-end’ luxury items for brandconscious upper middle class and rich class people. Itdoesn’t hurt population at large. It was not like peoplewould stop purchasing from local garment store to getNike or Adidas.

.

19


Big Bazaar opens mall in above cities: selling t-shirts ofmultiple-brands such as Reebok, Nike, Adidas, AllenSolley, Van Huesen, Peter England etc.+and+ they also sell unbranded t-shirts (you know thosebuy one get three t-shirts free from unknown companies.)

So this is multi-brand retail: when an outlet sells aproduct (t-shirt, tie, shoes anything) of more than onebrand.

Multi Brand Retail:

Big Bazaar opens mall in above cities: selling t-shirts ofmultiple-brands such as Reebok, Nike, Adidas, AllenSolley, Van Huesen, Peter England etc.+and+ they also sell unbranded t-shirts (you know thosebuy one get three t-shirts free from unknown companies.)

So this is multi-brand retail: when an outlet sells aproduct (t-shirt, tie, shoes anything) of more than onebrand.

.

MULTI BRAND RETAILERS IN INDIA

FDI IN RETAILING IN INDIA:

In December 2011, under pressure from the opposition, Indian governmentplaced the retail reforms on hold till it reached a consensus.

In January 2012, India approved reforms for single-brand stores welcominganyone in the world to innovate in Indian retail market with 100%ownership, but imposed the requirement that the single brand retailersource 30% of its goods from India.

Until 2011, Indian central government denied Foreign Direct Investment(FDI) in multi-brand retail, forbidding foreign groups from any ownershipin supermarkets, convenience stores or any retail outlets.

Even single-brand retail was limited to 51% ownership and a bureaucraticprocess.

These market reforms paved the way for retail innovation and competitionwith multi-brand retailers such as Wal-Mart, Carrefour and Tesco, as wellsingle brand majors such as IKEA, Nike, and Apple

In December 2011, under pressure from the opposition, Indian governmentplaced the retail reforms on hold till it reached a consensus.

In January 2012, India approved reforms for single-brand stores welcominganyone in the world to innovate in Indian retail market with 100%ownership, but imposed the requirement that the single brand retailersource 30% of its goods from India.

Until 2011, Indian central government denied Foreign Direct Investment(FDI) in multi-brand retail, forbidding foreign groups from any ownershipin supermarkets, convenience stores or any retail outlets.

Even single-brand retail was limited to 51% ownership and a bureaucraticprocess.

These market reforms paved the way for retail innovation and competitionwith multi-brand retailers such as Wal-Mart, Carrefour and Tesco, as wellsingle brand majors such as IKEA, Nike, and Apple

.

FDI IN RETAILING IN INDIA:

.

IMPACT OF FDI : DIFFERENT POINTS OF VIEW

Benefit Fresh produce Local source Consistent quality Safer food Value for money Lower cost compared to open market buys

Government ArgumentBenefit Fresh produce Local source Consistent quality Safer food Value for money Lower cost compared to open market buys

.

CONTROVERSY LEAD TO THREATS

Work will be done by Indians, profits will go toforeigners.

Like the East India Company, Wal-Mart couldenter India as a trader and then take overpolitically.

There will be sterile homogeneity and Indiancities will look like cities anywhere else.

The government hasn't built consensus. Dual effect on unemployment , Development &

Economy

Work will be done by Indians, profits will go toforeigners.

Like the East India Company, Wal-Mart couldenter India as a trader and then take overpolitically.

There will be sterile homogeneity and Indiancities will look like cities anywhere else.

The government hasn't built consensus. Dual effect on unemployment , Development &

Economy25

“The language that the BJP has employed tothreaten foreign investors is condemnable, veryregrettable and tantamount to verbal lumpenism. Tosay that governments will change in states afterrecent elections and new government may canceldecisions taken by the Centre on FDI is against thespirit of democratic polity....this indicates theirdictatorial mindset of my way or highway”




Manmohan Singh, Prime Minister of India

“There was a time when even the entry ofcomputers was resisted in the belief that itwould lead to a loss of jobs. If FDI canunleash the true potential of agricultural valuechain, we must welcome it. As far as thekirana store is concerned, let us notunderestimate Indian ingenuity. Wal-mart canco-exist with the small shop, each adding tocustomer choice.”




Rajan Mittal, MD, Bharti Enterprises

BIBLIOGRAPHY:

Print Media: 1. The Times Of India 2. The HinduElectronic Media: 1. NDTV 24X7 2. Times Now 3. Headlines Today 4. CNN IBN

Print Media: 1. The Times Of India 2. The HinduElectronic Media: 1. NDTV 24X7 2. Times Now 3. Headlines Today 4. CNN IBN

.

BIBLIOGRAPHY:

Internet:1.http://www.globaljurix.com/foreign-direct-investment-retail-fdi.php2.http://en.wikipedia.org/wiki/Foreign_direct_investment3.http://www.fibre2fashion.com/industry-article/7/604/fdi-in-retailing1.asp4.http://articles.timesofindia.indiatimes.com/2011-11-29/india/30453728_1_retail-sector-small-retailers-global-retail-giants5.http://sanjaykaul.wordpress.com/2011/12/02/10-reasons-why-fdi-in-retail-is-a-bad-idea/6.http://businesstoday.intoday.in/story/govt-may-announce-fdi-package-for-retail-aviation-sector/1/187955.html

Internet:1.http://www.globaljurix.com/foreign-direct-investment-retail-fdi.php2.http://en.wikipedia.org/wiki/Foreign_direct_investment3.http://www.fibre2fashion.com/industry-article/7/604/fdi-in-retailing1.asp4.http://articles.timesofindia.indiatimes.com/2011-11-29/india/30453728_1_retail-sector-small-retailers-global-retail-giants5.http://sanjaykaul.wordpress.com/2011/12/02/10-reasons-why-fdi-in-retail-is-a-bad-idea/6.http://businesstoday.intoday.in/story/govt-may-announce-fdi-package-for-retail-aviation-sector/1/187955.html

.

THANK YOU !!

.

Date post:	19-Jan-2015
Category:	Documents
Upload:	rahul-roy
View:	221 times
Download:	0 times

Fdi

Documents