Fdi in retail


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Fdi in retail

  1. 1. FDI IN RETAIL<br />Divya Raman<br />Corporate Department<br />Altacit Global<br />Email: info@altacit.com Website: www.altacit.com<br />
  2. 2. RETAIL<br />Retail – interface between producer and individual consumer for personal consumption.<br />Retailer - one who stocks the producer’s goods and is involved in the act of selling it to the individual consumer, at a margin of profit.<br />
  3. 3. Indian Scenario <br />Retailing is the single largest component of the services sector in terms of contribution to GDP.<br />Its share in GDP is 14%.<br />
  4. 4. Types<br /><ul><li>Organized - trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. Eg: Corporate backed hypermarkets.
  5. 5. Unorganized - traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores, paan/beedishops, convenience stores, hand cart and pavement vendors, etc.</li></li></ul><li>Role of Retail in Indian Economy<br />It is the backbone of Indian economy.<br />A.T. Kearney - well-known international management consultant - India as the ‘second most attractive retail destination’ globally from among thirty emergent markets.<br />
  6. 6. Foreign Investment<br /> ‘Foreign investment’ is investment in an enterprise by a Non-Resident irrespective of whether this involves new equity capital or re-investment of earnings. Foreign investment is of two kinds – (i) Foreign Direct Investment (FDI) and (ii) Foreign Portfolio Investment. (As per Consolidated FDI Policy April 1, 2010)<br /> <br />
  7. 7. Legal Basis<br />Foreign Direct Investment by non-resident in resident entities through transfer or issue of security to person resident outside India is a ‘Capital account transaction’ and Government of India and Reserve Bank of India regulate this under the FEMA, 1999 and its various regulations.<br />
  8. 8. Consolidated FDI policy April 1, 2010<br /><ul><li>Circular issued by Department of Industrial Policy and Ministry of Commerce and Industry.
  9. 9. This circular consolidates into one document all the prior policies/regulations on FDI which are contained in FEMA, 1999, RBI Regulations under FEMA, 1999 and Press Notes/Press Releases/Clarifications issued by DIPP and reflects the current ‘policy framework’ on FDI.</li></li></ul><li>FDI in Retail<br />Current Position: <br /><ul><li>FDI is permitted only in single brand product retailing – 50%.
  10. 10. In multi brand – FDI is not permitted.</li></li></ul><li>Advantages of FDI in Retail<br /><ul><li>Greater Efficiency and improved living standards.
  11. 11. Greater integration into the Global economy.
  12. 12. Price Reduction.
  13. 13. Improved selection.
  14. 14. Greater output and domestic consumption.</li></li></ul><li>Disadvantages of FDI in Retail<br /><ul><li>Labour displacing.
  15. 15. Destroy traditional retail sector.</li></li></ul><li>Attributes of World Bank<br /><ul><li>FDI in retail – beneficial for India in terms of price and availability of products.
  16. 16. Would boost food products, textiles and garments, leather products etc.
  17. 17. Creates job opportunities at various levels.</li></li></ul><li>Impact of FDI in Retail in India<br />Consumers – access to some of the major global brands.<br />Improved quality and variety of products.<br />Increase competition and expand manufacturing.<br />
  18. 18. Economic Survey 2010-11<br />"Permitting FDI (foreign direct investment) in retail in a phased manner beginning with metros and incentivizing the existing retail shops to modernize could help address the concerns of farmers and consumers. FDI in retail may also help bring in technical know-how to set up efficient supply chains which could act as models of development."<br />
  19. 19. Conclusion<br />All this promises to make the Indian retail market a real happening place in the days ahead while at the same time offering immense business opportunities to the domestic entrepreneurs. In fact, this is likely to transform the whole contours of the India market, making it a part of the overall global market.<br />
  20. 20. THANK YOU<br />