India’s First Retail B School
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FDI (Foreign Direct Investment ) in Retail
India’s First Retail B School
Indian Retail Sector 2012 • India ranked fifth in the Global Retail Development Index 2012 (AT
Kearney, leading global management consulting firm)• An estimated 35 million people are employed in the Indian retail
industry, which makes it the second largest employer in the country (Bisaria, 2012)
India’s First Retail B School
Indian Retail Sector Growth • India’s retail industry, which currently accounts for around 15% of the
nation’s GDP, is expected to grow almost three times to $660 billion by 2015
• India, with its exploding population has always been an exciting market for multinational companies, which have been eyeing to invest in the Indian retail sector for years
India’s First Retail B School
Share of Organized Retail
US Japan China India0
10
20
30
40
50
60
70
80
90
Contribution of Organized Retailing in the Retail Sector by Country Source: EconomyWatch
India’s First Retail B School
FDI: The Backdrop The Government of India denied foreign direct investment both in single-brand and multi-brand retailingThe Indian government announced the opening of FDIs both to single and multi brand retail sectorsThe Ministry of Commerce and Industry was seeking cabinet approval for allowing 51% FDI in multi-brand retail trading and for increasing the FDI limit in single-brand retail trading from 51% to 100%The cap on FDI in single-brand retail was finally lifted to 100%This allowed foreign single brands, like Louis Vuitton, Gucci and Adidas, to get full control on their retail operations in India, subject to the condition that they should source 30% of their goods from India
Until 2006
Nov 2011
Jan 10, 2012
India’s First Retail B School
Footw
ear
Clothing
Books & M
usic
Jwelle
ry & Acce
ssory
Durables
House (F
urnish
ing)
Medica
l Servi
ces
Food &
Groce
ry
Health &
Beauty
0
5
10
15
20
25
Penetration of Organized Retail Across Categories in the Indian Retail SectorSource: Indian Mirror
Organized Retail Penetration Across Categories (in %)
India’s First Retail B School
Terms and ConditionsMinimum limit for FDI in the country’s multi-brand retail sector
Minimum population of the city in which investment in multi-brand retail is allowed
Minimum sales to be made to small retailers
Minimum value of manufactured items procured that should be sourced from small and medium enterprises in India
FDI in retail is subject to the state government’s permission.
$100 million
1 million
30 percent
30 percent
India’s First Retail B School
How FDI in Retail May Benefit IndiaIndian farmers get only around 30-35% of the ultimate retail price. The rest is consumed by middlemen, wholesalers & retailers. After the opening of FDIs, retail giants will purchase goods directly from the farmers, who will receive a much better price for their products.A huge amount food grains and vegetables go waste due to the lack of infrastructure and proper storage systems. Foreign direct investment in multi-retail is expected to significant reduce this wastage.FDI in retail is likely to create about 10 million jobs in the span of a decade (Indian Staffing Federation report, Sept 2012). Over these years, there would be 4 million direct jobs & about 5 million indirect jobs created in the Indian economy.FDI in retail will benefit Indian consumers with a wide choice of brands and products.
Benefit to Farmers
New Employment
Benefit to Consumers
Reduced Food Wastage
India’s First Retail B School
FDI in Retail: What are the Concerns?Retail giants like Wal-Mart, Carrefour and Tesco will quite obviously outperform these traditional Kirana stores in terms of infrastructure, product range, quality of service, and price range. As a result, a lot a people who are dependent on earning from these stores are expected to lose jobs.
Impact on Kirana Stores
According to an article by journalist Bhavdeep Kang published by Rediff Business on November 25, 2011, “Global retail giants are highly capital intensive and create fewer jobs. A single Wal-Mart store could put tens of thousands of mom and pop stores out of business -- as it did in the US -- while generating perhaps 3,000 jobs.”
India’s First Retail B School
FDI in Retail: What are the Concerns?A major concern is that opening FDI in retail may cause huge price hikes in the long run. Global retail giants will reduce the price of their products initially in order to capture the retail market. Once they gain a foothold in the Indian retail market, they may significantly increase the cost of goods.
CPI (M) Politburo said in a statement on September 21, 2012, “By this policy announcement, Manmohan Singh government has taken the single biggest step of destroying the livelihood of the largest number of people engaged in retail trade in India.”
Inflation in the Long Run
Threat of Unemployment
India’s First Retail B School
FDI in Retail: The China Experience China is an Asian nation with high population and traditional industries,
much like India. While the concerns surrounding the influx of FDI in multi-brand retail are valid, China’s experience proves otherwise.
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% of
the country’s retail market The country’s employment in the retail
industry has grown from 4% of the total workforce in 1992 to 7% in 2007
China also witnessed an increase of around 30% in the number of traditional retails between 1996 and 2001
India’s First Retail B School
About GREAT India B School
GREAT India is the first retail focused business school in India
The courses offered at GREAT India B School are: PG Diploma in Retail Management, PG Diploma in Retail Entrepreneurship, PG Diploma in Visual Merchandising and Store Design, MBA (with specialization in retail), BBA (with specialization in retail), BCom(Hons) and BA(Hons).
RAI - Retailers Association of India, SCAI – Shopping Centers Association 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 School
Courses Offered
Industry Affiliations
Foreign Affiliations
India’s First Retail B School
About GREAT India B School
International retail gurus and leaders from academia teach at our campuses. Great opportunity to gain insight from management coaches from across the globe.
Modern infrastructure - wi-fi enabled campus and well stocked library. Interactive teaching methods followed. Workshops, seminars and industry visits to aid learning.
Campuses at Hyderabad & Lavasa (near Pune). Sprawling
campuses, with hostel, cafeteria, gym, sports facilities (cricket pitch, tennis court, golf course, jogging track, etc)
International Faculty
Learning Aids
Campus Locations
India’s First Retail B School
Contact GREAT India B School?
S-21/a, Gundlapochampally, Medchal Mandal R R DistrictSecunderabadAndhra Pradesh – 501401Phone No: 0841-8325722
3rd floor, Belvedere,Raj Bhavan Road,SomajigudaHyderabad – 500082Phone No: 8008104496/8008900317
Hyderabad Campus
Hyderabad Office
Information Centre80 Event Centre StreetPost Mose, DasveLavasa, Pune- 412107Maharashtra, IndiaPhone No: 09763722320
[email protected]://www.greatindiabschool.edu.in/
For Retail Management courses contact: [email protected] No: 09650274177
Lavasa Campus
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