Fdi in indian retailing industry  b.v.raghunandan
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  • 1. Foreign Direct Investment in Multi- Brand Retailing in India -B.V.Raghunandan, SVS College, Bantwal Post-Graduate Department of Management, Sri Devi College, Kenjar, Mangalore December 5, 2012
  • 2. Classes of Foreign Investment • Foreign Institutional Investment • Foreign Direct Investment
  • 3. Retailing: Brand Modes • Single Brand : Also known as vertical brands - Single Line Format - Multiple Locations - Limited Investment • Multi-Brand : Many brands including private brands - Limited Locations - Huge Investment
  • 4. Recent Government Move• 51% FDI in Multiple Brand Retailing• 100% FDI in Single Brand Retailing• 30% Outsourcing Locally from MSME units• Brands need not be Owned by the Parent, but by any of the Subsidiaries• In cities with a population of not less than 10 lakh
  • 5. The Widespread Opposition• Political Parties are Dominated by Mandis• Fear of the Middlemen being Removed• Economic Issues are Adopted when Political Ideologies Whither Away• Kiranawala is only an eye wash argument
  • 6. Consistency in Political Stand • Party in Power Favours it for Achievement • Parties in Opposition Use it to Create an Emotional Hype • Political Mileage is Obtained • Creation of a Mass Hysteria • Less Healthy Discussion • Doomsday Attitude for Every Change
  • 7. Impact on Local Kiranawalla• Near the Location of the Customers• Flexibility on the Basis of Requirements of Customers• No need to Scale up the Model• Low Employee and Establishment Costs• Customer Services• Limited Suitability for Large Retail Format
  • 8. • Encouraging ContractNeed for FDI Forming • Better Processing of Agricultural Produce • Networking with Local Retailers • Commercial Warehousing in Rural Areas • Better Dissemination of Market Information • Healthier Agricultural Practices • Better Seeds and Organic Farming • Better Agricultural Research • Avoiding Wastages
  • 9. Earlier Examples• ITC’s E’Choupal• Pepsi’s Contract Farming in Punjab• EID Parry’s Farmers-Connect• AMUL’s Success• Nestle’s Dairy Development• Private Dairies
  • 10. Some of the Indian corporates in Linkage with Agri value chain• Adani Agrifresh : Apple value chain• TATA CHEMICALS LTD : Extension Services• ITC : Agri allied sector• Jain irrigation : Water conservation• Marico : Safflower value chain• National Spot Exchange : Enhancing farm income• Global Green Co Ltd : Value chain integration in Gherkin• Chambal Fertilisers Ltd : Improving Agri Productivity
  • 11. Some of the MNCs in Linkage with Agri value chain ADM : Soybean value chain SAB MILLER : Barley value chain PEPSICO : Potato value chain BHARTI WALMART : Supply chain across diverse crops MONSANTO : Sustainable value chain in Maize SUMINTER INDIA ORGANICS : Sustainability in organic farming FIELDFRESH FOODS LTD : Fruits & Vegetable value chain
  • 12. • 3,500 small & marginal farmers ( < 1Ha)• 4000 Acres under contract farming of baby corn• Increase in farm output by 20%• Technology transfer in conservation of water, chemical fertilisers and pesticides• Efficient weather insurance• Modern post harvest facility• Rural employment
  • 13. ITC  Marketing support  Retail linkage  Watershed development•  Wasteland development  Sustainable off-farm livelihood IMPACT  1.03 lac Ha wasteland converted into green land  Increase in farmer income by >50%  E-choupal covers 4 million farmers with direct market linkage  Direct linkage with retailing  Company with maximum impact on farmers
  • 14. PEPSICO INDIA  Contract farming in special variety of Potato for their chips brand Lays  Engaged with farmers in Bihar, Gujarat, Karnataka, Maharashtra  PPP in R&D and Agriculture extension  Technical assistance on latest cultivation practices IMPACT  11,000 farmers  Increase in yields / net farm income by 40%  Price support against volatility
  • 15. ADM- Soybean revolution in Maharashtra  ADM has an oilseed process plant in • Latur, a backward district in Maharashtra with no soybean crop.  ADM, initiated extension services in this area.  Agri advisory centres were set up for a cluster of each 20 villages and farmers were introduced to soybean cultivation  Women farmers were trained as they work in fields.  High yielding variety seeds were produced through farmers with linkage to Universities  End to end technical guidance was given to farmers
  • 16. ADM- Soybean revolution in Maharashtra IMPACT 2002 : 19,500 HA 2003 : 49,500 HA 2004 : 1,38,500 HA 2005 : 1,75,000 HA 2006 : 1,80,000 HA 2007: 1,86,000 HA 2008 : 2,05,000 HA 2009 : 2,26,000 HA 2010 : 2,43,000 HA 2011 : 2,74,000 HA 2012 : 3,03,000 HA
  • 17. More crop per drop Maximise yields with minimum water sources Develop models for each crop. Saving on fertiliser and judicious use of micronutrientsReduce cultivation costs Well administered R&D to manage emerging challenges
  • 18. Interest of FDI• Large Markets• Stable Income Levels in India• Sourcing of Agricultural Produce• Festivals and Special Occasions (Multi-etnic and Multi-religious)• Cash Based Transactions• Diversified Consumption
  • 19. Problems for the FDI• Limited Working Hours• Working Hours Unsuitable for Indian Customers• Expensive Real Estate• High Salary to the Employees• High Establishment Expenses• Unsuitable for Many Lines of Products• Indian Corporate Retailers paint a sad Story• Younger Demography
  • 20. Focus• Development of Infrastructure in Rural Areas• Better Price for the Farmers• Effective Utilisation of Grains in the Godowns of Central and State Warehousing Corporation• Better Processing Facilities• Increasing the Storage Facilities• Better Farming Practices• Better Farmer Education using Modern Technology
  • 21. THANK YOU