CRAFTED BY :-SUYASH DUBEY

RAKESHDAWANI

CONTENTS

What is Foreign Direct Investment ?

Present status of FDI

Foreign entities keen to invest in Indian retail market

What is retail & what it includes ?

Positive & negative implications of FDI in retail sector

Our opinion on this subject

WHAT IS FDI ?

Investment by a co. in non-domestic country

By buying or expanding any existing business

It is passive investment unlike portfolio investment (stock & bonds)

It will always focus on acquiring controlling interest.

IMPACT ON LOCAL PLAYERS

Have to face competition with respect to :-

Brand value

Technological advancement

Capacity to invest

PRESENT STATUS

Currently 51% FDI is allowed in ‘Single Brand Retail’ such as IKEA, Adidas, Apple etc.

It is proposed by our Prime minister Mr. Manmohan Singh To Allow 51% FDI in Multi Brand Retail

To Increase FDI in Single brand retail to 100% .

FOREIGN CO’S KEEN TO INVEST WALMART

Having revenue of $421849 Million which is equivalent to Rs.21 lakh crore (approx.)

CARREFOUR

Having revenue of $121519 Million which is equivalent to Rs.6 lakh crore (approx.)

TESCO

Having revenue of $94244 Million which is equivalent to Rs.4.71 lakh crore (approx.)

WHAT IS RETAIL ?

Retail sector means all the shops that sell goods to the ultimate customer, who buys them for personal and not business use.

It is entirely different from Trading.

Maximum composition of retail sector in India is presently covered by small players

WHAT IT INCLUDES ?

It includes providing goods & services in varied areas out of which a partial list is as follows :-

Automobile dealers

Clothing stores

Department & grocery stores

Theatre

Barber shops, etc.

CURRENT STATUS OF RETAIL SECTOR

Super Markets captures only 4% of the total Indian retail market and rest 96% is in unorganized form which includes Grocery stores, corner shops, hand kart, convenience stores & pavement shops .

Over 14 million outlets operate in the country and only 4% of them are larger than 500 sq ft in size.

POSITIVE & NEGATIVE IMPLICATIONS OF FDI

V/S

POSITIVE IMPACTS OF FOREIGN

DIRECT INVESTMENT

INCREASE IN EMPLOYMENT

INCREASED COMPETITION

INCREASED CONVENIENCE TO CONSUMER

NEGATIVE IMPACTS OF FOREIGN

DIRECT INVESTMENT

LOSS OF LIVELIHOOD

DOMINATION BY GIANTS

SHIFT OF REVENUE

PERSONAL OPINION

FOR AGAINSET

CLARIFICATION OF NORMS

It is mandatory for them to source at least 30% of their goods from Indian small and medium suppliers.

FDI to be restricted to 51 cities with a population of more than a million.

Mandatory to invest in back-end infrastructure that will help reduce wastage of farm produce, improve the livelihood of farmers, lower the prices of products and ease supply-side inflation.

FACTS ABOUT CHINA

After the allowance of 100 % FDI in multi brand retail the quality of products & services improved to a great extent.

Also the local players are co-existing with the foreign players.

POSITIVE ATTITUDE

Change with changes

Risk taking capacity

Adapt new things from Walmart

CONCLUSION

Small players being thrown out of the market not because of FDI but because of their own incapability or non-competence nature.

It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.

- Charles Darwin

EXPECTED QUERY ??????

Q- Walmart, Carrefour & Tesco are so successful in foreign countries so how we can say that will not dominate the retail business in India ?

Ans. –

1. The reason for their success in foreign countries is the cultureprevailing there. For them super markets are plural for retail. But in acountry like India people are dependent on small shopkeepers forpurchasing necessities due to personal attention & convenient creditfacilities. So irrespective of huge size of Indian economy they will not getthe same level of response here as they are getting in foreign countries.

2. The easily accessible places of nearly all the big cities areovercrowded by business people so they have to establish themselves inthe outskirts of the city .