Rupesh

FDI IN RETAIL RUPESH R CHAUBE

RETAILRetail – interface between producer andindividual consumer for personalconsumption.Retailer - one who stocks the producer’sgoods and is involved in the act of sellingit to the individual consumer, at a marginof profit.

Indian ScenarioRetailing is the single largestcomponent of the services sector interms of contribution to GDP.Its share in GDP is 14%.

INDIAN RETAIL SECTOR• Only 5% of retail sale comes fromorganised retail sector.• India is the 3rd most attractivedestination for fdi in retail sector and sizeof the Indian retail will be 535 US dollarby2013.

Types•Organized - trading activities undertaken bylicensed retailers, that is, those who are registeredfor sales tax, income tax, etc. Eg: Corporate backedhypermarkets.•Unorganized - traditional formats of low-costretailing, for example, the local kirana shops, ownermanned general stores, paan/beedi shops,convenience stores, hand cart and pavementvendors, etc.

Role of Retail in Indian Economy – It is the backbone of Indian economy. – A.T. Kearney - well-known international management consultant - India as the ‘second most attractive retail destination’ globally from among thirty emergent markets.

Foreign Investment‘Foreign investment’ is investment in anenterprise by a Non-Resident irrespective ofwhether this involves new equity capital orre-investment of earnings. Foreigninvestment is of two kinds – (i) ForeignDirect Investment (FDI) and (ii) ForeignPortfolio Investment. (As per ConsolidatedFDI Policy April 1, 2010)

FDI in RetailCurrent Position:•FDI is permitted only in singlebrand product retailing – 100%.•In multi brand – FDI is 50%permitted.

Advantages of FDI in Retail•Greater Efficiency and improved livingstandards.•Greater integration into the Globaleconomy.•Price Reduction.•Improved selection.•Greater output and domestic consumption.

Disadvantages of FDI in Retail•Labour displacing.•Destroy traditional retailsector.

Impact of FDI in Retail in India1. Consumers – access to some of the major global brands.2. Improved quality and variety of products.3. Increase competition and expand manufacturing.

Economic Survey 2010-11"Permitting FDI (foreign direct investment) inretail in a phased manner beginning withmetros and incentivizing the existing retailshops to modernize could help address theconcerns of farmers and consumers. FDI inretail may also help bring in technical know-how to set up efficient supply chains whichcould act as models of development."

ConclusionAll this promises to make the Indian retail market areal happening place in the days ahead while at thesame time offering immense businessopportunities to the domestic entrepreneurs. Infact, this is likely to transform the whole contoursof the India market, making it a part of the overallglobal market.

THANK YOU

Rupesh

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