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Foreign Direct Investment in Retail February 23, 2004
Agenda Retailing : An overview Indian retail The change factor FDI in Indian retailing Why  FDI ? How FDI ? Case study : C...
Agenda Retailing : An overview Indian retail The change factor FDI in Indian retailing Why  FDI ? How FDI ? Case study : C...
<ul><li>Retailing </li></ul><ul><ul><li>World’s largest private industry </li></ul></ul><ul><ul><ul><li>US$ 6.6 trillion s...
<ul><li>Wal-Mart </li></ul><ul><ul><li>Topmost global Fortune 500 company(3 Consecutive Years) </li></ul></ul><ul><ul><li>...
Agenda Retailing : An overview Indian retail The change factor FDI in Indian retailing Why  FDI ? How FDI ? Case study : C...
Weekly Markets Village Fairs Melas Convenience Stores Mom and Pop/Kiranas PDS Outlets Khadi Stores Cooperatives Exclusive ...
<ul><li>Informal retailing Sector </li></ul><ul><ul><li>Typically small retailers. </li></ul></ul><ul><ul><li>Evasion of t...
<ul><li>Corporate Houses </li></ul><ul><ul><ul><li>Tatas:  Tata Trent </li></ul></ul></ul><ul><ul><ul><li>RPG group: Food ...
<ul><li>Modern Format retailers </li></ul><ul><ul><li>Supermarkets  (Foodworld) </li></ul></ul><ul><ul><li>Hypermarkets  (...
<ul><li>Hypermarket </li></ul><ul><ul><li>Big Bazaar </li></ul></ul><ul><ul><li>Giants </li></ul></ul><ul><ul><li>Shoprite...
Agenda Retailing : An overview Indian retail The change factor FDI in Indian retailing Why  FDI ? How FDI ? Case study : C...
<ul><li>Greater per capita income </li></ul><ul><ul><li>Increase in disposable income of middle class households </li></ul...
<ul><li>The urban consumer </li></ul><ul><ul><li>Getting exposed to international lifestyles </li></ul></ul><ul><ul><li>In...
<ul><li>Market size </li></ul><ul><ul><li>Current market size is roughly US$ 286 bn* </li></ul></ul><ul><ul><li>96% of the...
<ul><li>Low domestic competition </li></ul><ul><ul><li>Because of fragmented nature of industry </li></ul></ul><ul><li>Lac...
<ul><li>Highly distorted real estate market </li></ul><ul><ul><li>Pro-tenant laws </li></ul></ul><ul><ul><li>Zoning laws <...
<ul><li>Growth determining factors  </li></ul><ul><ul><li>Government Policy </li></ul></ul><ul><ul><li>Infrastructure deve...
<ul><li>India ranked 5th in the Global A.T Kearney Retail Development Index </li></ul><ul><ul><li>Second only to China in ...
Agenda Retailing : An overview Indian retail The change factor FDI in Indian retailing Why  FDI ? How FDI ? Case study : C...
<ul><li>Current Indian FDI Regime  </li></ul><ul><ul><li>FDI not permitted in retail trade sector, except in:  </li></ul><...
<ul><li>Metro Group of Germany  </li></ul><ul><ul><li>Cash-and-carry wholesale trading  </li></ul></ul><ul><ul><li>Proposa...
<ul><li>Franchise </li></ul><ul><ul><li>International company gives name and technology to local partner. Gets royalty in ...
<ul><li>Distribution </li></ul><ul><ul><li>International company sets up local distribution office </li></ul></ul><ul><ul>...
Agenda Retailing : An overview Indian retail FDI in Indian retailing Why FDI ? How FDI ? Incentives for FDI Case study : C...
<ul><li>Improve competition </li></ul><ul><li>Develop the market </li></ul><ul><li>Greater level of exports due to increas...
<ul><li>Investment in technology </li></ul><ul><ul><li>Cold storage chains solve the perennial problem of wastage </li></u...
<ul><li>Manpower and skill development </li></ul><ul><ul><li>Through retail training and  </li></ul></ul><ul><ul><li>Great...
Benefits to the government
<ul><li>Increase employment levels </li></ul><ul><ul><li>FDI would result in market growth and expansion </li></ul></ul><u...
Agenda Retailing : An overview Indian retail The change factor FDI in Indian retailing Why  FDI ? How FDI ? Case study : C...
<ul><li>FDI should be allowed in stages </li></ul><ul><ul><li>Initial stages: 26% FDI </li></ul></ul><ul><ul><li>Establish...
Agenda Retailing : An overview Indian retail The change factor FDI in Indian retailing Why  and why not FDI ? How FDI ? Ca...
<ul><li>FDI permitted in 1992. 40 foreign retailers have secured approval  </li></ul><ul><ul><li>Retail sales have grown@1...
7 8 8 0 8 5 9 0 9 1 9 2 9 3 9 4 9 5 9 6 9 7 9 8 9 9 0 0 0 1 0 2 75 150 225 300 375 US$ bn Total wholesale and retail trade...
China: The effect of FDI <ul><li>Modern formats have grown after FDI </li></ul><ul><li>But so have traditional players </l...
Employment in retailing is increasing Source : China Statistical Yearbook 2001
<ul><li>Walmart </li></ul><ul><ul><li>Entered Chinese market in 1996 </li></ul></ul><ul><ul><li>Has 43 stores in 19 cities...
<ul><li>Strong evidence in favor of FDI </li></ul><ul><ul><li>FDI improves the entire size of the industry </li></ul></ul>...
Agenda Retailing : An overview Indian retail The change factor FDI in Indian retailing Why  FDI ? How FDI ? Case study : C...
<ul><li>Grant industry status to retail </li></ul><ul><li>Permit FDI in Retail in phases </li></ul><ul><li>Invest in suppl...
<ul><li>THANK YOU </li></ul>
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  1. 1. Foreign Direct Investment in Retail February 23, 2004
  2. 2. Agenda Retailing : An overview Indian retail The change factor FDI in Indian retailing Why FDI ? How FDI ? Case study : Chinese retail Recommendations
  3. 3. Agenda Retailing : An overview Indian retail The change factor FDI in Indian retailing Why FDI ? How FDI ? Case study : Chinese retail Recommendations
  4. 4. <ul><li>Retailing </li></ul><ul><ul><li>World’s largest private industry </li></ul></ul><ul><ul><ul><li>US$ 6.6 trillion sales annually </li></ul></ul></ul><ul><li>Indian retailing </li></ul><ul><ul><li>Largest employer after agriculture - 8%* of population </li></ul></ul><ul><ul><li>Highest outlet density in world </li></ul></ul><ul><ul><ul><li>Around 12 mn outlets </li></ul></ul></ul><ul><ul><li>Still evolving as an industry </li></ul></ul><ul><ul><ul><li>Long way to go </li></ul></ul></ul>An overview Retailing: An overview *www.etretailbiz.com/dec2002
  5. 5. <ul><li>Wal-Mart </li></ul><ul><ul><li>Topmost global Fortune 500 company(3 Consecutive Years) </li></ul></ul><ul><ul><li>Annual Sales of over US$ 250 bn </li></ul></ul><ul><ul><li>India’s two largest retail player turnover around US$ 158 mn (Bata) and US$ 102 mn (Shoppers Stop) </li></ul></ul><ul><li>Fortune 100 </li></ul><ul><ul><li>9 Retailers </li></ul></ul><ul><ul><li>Carrefour, Ahold, Home Depot, Kroger, Metro, Kmart-Sears, Target, Albertsons’ </li></ul></ul>An overview Retailing: An overview *Fortune List of world’s top companies **Euromonitor India Retail Survey
  6. 6. Agenda Retailing : An overview Indian retail The change factor FDI in Indian retailing Why FDI ? How FDI ? Case study : Chinese retail Recommendations
  7. 7. Weekly Markets Village Fairs Melas Convenience Stores Mom and Pop/Kiranas PDS Outlets Khadi Stores Cooperatives Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls Traditional/Pervasive Reach Government Supported Historic/Rural Reach Modern Formats/ International Evolution of Indian retail Source of Entertainment Neighborhood Stores/Convenience Availability/ Low Costs / Distribution Shopping Experience/Efficiency
  8. 8. <ul><li>Informal retailing Sector </li></ul><ul><ul><li>Typically small retailers. </li></ul></ul><ul><ul><li>Evasion of taxes </li></ul></ul><ul><ul><ul><li>Difficulty in enforcing tax collection mechanisms </li></ul></ul></ul><ul><ul><li>No monitoring of labor laws </li></ul></ul><ul><li>Formal Retailing Sector </li></ul><ul><ul><li>Typically large retailers </li></ul></ul><ul><ul><li>Greater enforcement of taxation mechanisms </li></ul></ul><ul><ul><li>High level of labor usage monitoring </li></ul></ul>Indian retail Evolution of Indian retail
  9. 9. <ul><li>Corporate Houses </li></ul><ul><ul><ul><li>Tatas: Tata Trent </li></ul></ul></ul><ul><ul><ul><li>RPG group: Food World, Health and Glow, etc </li></ul></ul></ul><ul><ul><ul><li>ITC: Wills Life Style </li></ul></ul></ul><ul><ul><ul><li>Rahejas(ShoppersStop), Hiranandani(Haiko), DLF(DT cinemas) etc. </li></ul></ul></ul><ul><li>Dedicated brand outlets </li></ul><ul><ul><li>Nike, Reebok, Zodiac etc </li></ul></ul><ul><li>Multi-brand outlets </li></ul><ul><ul><li>Vijay Sales, Viveks etc </li></ul></ul><ul><li>Manufacturers/ Exporters </li></ul><ul><ul><ul><li>Pantaloons, Bata, Weekender </li></ul></ul></ul>Indian retail Categories of Indian retail
  10. 10. <ul><li>Modern Format retailers </li></ul><ul><ul><li>Supermarkets (Foodworld) </li></ul></ul><ul><ul><li>Hypermarkets (Big Bazaar) </li></ul></ul><ul><ul><li>Department Stores (S Stop) </li></ul></ul><ul><ul><li>Specialty Chains (Ikea) </li></ul></ul><ul><ul><li>Company Owned Company Operated </li></ul></ul><ul><li>Traditional Format Retailers </li></ul><ul><ul><li>Kiranas: Traditional Mom and Pop Stores </li></ul></ul><ul><ul><li>Kiosks </li></ul></ul><ul><ul><li>Street Markets </li></ul></ul><ul><ul><li>Exclusive /Multiple Brand Outlets </li></ul></ul>Indian retail Classifying Indian retail
  11. 11. <ul><li>Hypermarket </li></ul><ul><ul><li>Big Bazaar </li></ul></ul><ul><ul><li>Giants </li></ul></ul><ul><ul><li>Shoprite </li></ul></ul><ul><ul><li>Star </li></ul></ul><ul><li>Department store </li></ul><ul><ul><li>Lifestyle </li></ul></ul><ul><ul><li>Pantaloons </li></ul></ul><ul><ul><li>Piramyds </li></ul></ul><ul><ul><li>Shoppers Stop </li></ul></ul><ul><ul><li>Trent </li></ul></ul><ul><li>Entertainment </li></ul><ul><ul><li>Fame Adlabs </li></ul></ul><ul><ul><li>Fun Republic </li></ul></ul><ul><ul><li>Inox </li></ul></ul><ul><ul><li>PVR </li></ul></ul>Indian retailers Large Indian retailers
  12. 12. Agenda Retailing : An overview Indian retail The change factor FDI in Indian retailing Why FDI ? How FDI ? Case study : Chinese retail Recommendations
  13. 13. <ul><li>Greater per capita income </li></ul><ul><ul><li>Increase in disposable income of middle class households </li></ul></ul><ul><ul><li>20.9%* growth in real disposable income in ’99-’03. </li></ul></ul><ul><li>Growing high and middle income population </li></ul><ul><ul><li>Growing at a pace of over 10%* per annum over last decade </li></ul></ul><ul><li>Affordability growth </li></ul><ul><ul><li>Falling interest rates </li></ul></ul><ul><ul><li>Easier consumer credit </li></ul></ul><ul><ul><li>Greater variety and quality at all price points </li></ul></ul>Indian consumer The changing Indian consumer † From Euromonitor Retail Survey
  14. 14. <ul><li>The urban consumer </li></ul><ul><ul><li>Getting exposed to international lifestyles </li></ul></ul><ul><ul><li>Inclined to acquiring asset </li></ul></ul><ul><ul><li>More discerning and demanding than ever </li></ul></ul><ul><li>No longer need-based shopping </li></ul><ul><ul><li>Shopping is a family experience </li></ul></ul><ul><li>Changing Mindset </li></ul><ul><ul><li>Increasing tendency to spend </li></ul></ul><ul><ul><li>Post Liberalization children coming of age </li></ul></ul><ul><ul><ul><li>100 mn 17-21 year olds*. Tend to spend freely. </li></ul></ul></ul><ul><li>Greater levels of education </li></ul>Indian consumer The changing Indian consumer *Data from NCAER
  15. 15. <ul><li>Market size </li></ul><ul><ul><li>Current market size is roughly US$ 286 bn* </li></ul></ul><ul><ul><li>96% of the 12 Million stores are less than 500 Sq. ft. </li></ul></ul><ul><ul><li>Forecast Growth rate for the retailing industry is roughly 8.3% for 2003-2008 </li></ul></ul><ul><ul><li>Sales from large format stores would rise by 24-49%** </li></ul></ul><ul><ul><li>Formal and modern format retailing would enjoy rapid growth </li></ul></ul>Anticipated growth Anticipated growth *From ICICI Retail Report **From Euromonitor Retail Survey
  16. 16. <ul><li>Low domestic competition </li></ul><ul><ul><li>Because of fragmented nature of industry </li></ul></ul><ul><li>Lack of exposure to global best practices </li></ul><ul><ul><li>Low entry barriers for unorganized retailing </li></ul></ul><ul><ul><li>Moderate entry barriers for organized retailing </li></ul></ul><ul><li>Wholesale system under-invested leading to 20-40% wastage </li></ul><ul><li>Non level playing field issues </li></ul><ul><ul><li>Wide differences in treatment of small and large retailers </li></ul></ul>Industry dynamics Industry dynamics
  17. 17. <ul><li>Highly distorted real estate market </li></ul><ul><ul><li>Pro-tenant laws </li></ul></ul><ul><ul><li>Zoning laws </li></ul></ul><ul><ul><ul><li>Zoning laws also vary from state to state </li></ul></ul></ul><ul><ul><li>Non-availability of government land, and fragmented private holdings makes it difficult for retailers to acquire land </li></ul></ul><ul><ul><ul><li>Government is largest property owner in country </li></ul></ul></ul><ul><ul><ul><li>Urban Land Ceiling act is archaic </li></ul></ul></ul><ul><ul><li>Stamp Duty and registration charges at high levels. Also vary from state to state </li></ul></ul>RE issues Real estate issues
  18. 18. <ul><li>Growth determining factors </li></ul><ul><ul><li>Government Policy </li></ul></ul><ul><ul><li>Infrastructure development </li></ul></ul><ul><ul><li>GDP growth </li></ul></ul><ul><ul><li>Employment generation and job creation </li></ul></ul><ul><ul><ul><li>In several new sunrise industries </li></ul></ul></ul><ul><ul><ul><li>Implies greater purchasing power </li></ul></ul></ul>Growth factors Growth factors
  19. 19. <ul><li>India ranked 5th in the Global A.T Kearney Retail Development Index </li></ul><ul><ul><li>Second only to China in Asia </li></ul></ul><ul><ul><li>Least saturated of all global markets studied </li></ul></ul><ul><ul><li>The least competitive of all global markets studied </li></ul></ul><ul><ul><ul><li>Implies lower barriers of entry for global players </li></ul></ul></ul><ul><ul><ul><li>Considering tremendous market size, excellent potential for foreign players </li></ul></ul></ul><ul><li>India ranked 3 rd in the Global A T Kearney FDI Confidence Index in 2004 </li></ul><ul><ul><li>Improved from Rank 6 in Year 2003 </li></ul></ul>Advantage India The Indian advantage
  20. 20. Agenda Retailing : An overview Indian retail The change factor FDI in Indian retailing Why FDI ? How FDI ? Case study : Chinese retail Recommendations
  21. 21. <ul><li>Current Indian FDI Regime </li></ul><ul><ul><li>FDI not permitted in retail trade sector, except in: </li></ul></ul><ul><ul><ul><li>Private labels </li></ul></ul></ul><ul><ul><ul><li>Hi-Tech items / items requiring specialized after sales service </li></ul></ul></ul><ul><ul><ul><li>Medical and diagnostic items </li></ul></ul></ul><ul><ul><ul><li>Items sourced from the Indian small sector (manufactured with technology provided by the foreign collaborator) </li></ul></ul></ul><ul><ul><ul><li>For 2 year test marketing (simultaneous commencement of investment in manufacturing facility required) </li></ul></ul></ul>FDI in Retail not permitted FDI in Indian retailing
  22. 22. <ul><li>Metro Group of Germany </li></ul><ul><ul><li>Cash-and-carry wholesale trading </li></ul></ul><ul><ul><li>Proposal faced strong opposition </li></ul></ul><ul><li>Entities established prior to 1997 </li></ul><ul><ul><li>Allowed to continue with their existing foreign equity components. </li></ul></ul><ul><ul><li>No FDI restrictions in the retail sector pre-1997 </li></ul></ul><ul><ul><li>Foodworld </li></ul></ul><ul><ul><ul><li>51:49 JV between RPG and Dairy Farm International, </li></ul></ul></ul><ul><ul><ul><li>Leading food retailer in India now </li></ul></ul></ul><ul><ul><li>Mc Donalds </li></ul></ul>Current FDI FDI in Indian retailing
  23. 23. <ul><li>Franchise </li></ul><ul><ul><li>International company gives name and technology to local partner. Gets royalty in return </li></ul></ul><ul><ul><li>In case master franchise is appointed for region or country, he has right to appoint local franchisees </li></ul></ul><ul><ul><ul><li>Nike, Pizza Hut, Tommy Hilfiger, Marks and Spencer, Mango </li></ul></ul></ul><ul><li>Manufacturing </li></ul><ul><ul><li>Company sets up Indian arm for production </li></ul></ul><ul><ul><ul><li>Bata India. It also has right to retail in India </li></ul></ul></ul>How they are present International retailers in India: Strategies
  24. 24. <ul><li>Distribution </li></ul><ul><ul><li>International company sets up local distribution office </li></ul></ul><ul><ul><li>Supply products to Indian retailers to sell </li></ul></ul><ul><ul><li>Also set up franchised outlets for brand </li></ul></ul><ul><ul><ul><li>Swarovski, Hugo Boss </li></ul></ul></ul><ul><li>Wholesale trading </li></ul><ul><ul><li>Cash and Carry operations </li></ul></ul><ul><ul><li>100% FDI permitted </li></ul></ul><ul><ul><ul><li>Metro Cash n Carry </li></ul></ul></ul>How they are present International retailers in India: Strategies
  25. 25. Agenda Retailing : An overview Indian retail FDI in Indian retailing Why FDI ? How FDI ? Incentives for FDI Case study : Chinese retail Recommendations
  26. 26. <ul><li>Improve competition </li></ul><ul><li>Develop the market </li></ul><ul><li>Greater level of exports due to increased sourcing by major players </li></ul><ul><ul><li>Sourcing by Wal-Mart from China improved multifold after FDI permitted in China </li></ul></ul><ul><ul><li>Similar increase in sourcing observed for Metro in India </li></ul></ul><ul><ul><li>Provides access to global markets for Indian producers </li></ul></ul>Benefits of FDI Why FDI?
  27. 27. <ul><li>Investment in technology </li></ul><ul><ul><li>Cold storage chains solve the perennial problem of wastage </li></ul></ul><ul><ul><li>Greater investment in the food processing sector technology </li></ul></ul><ul><ul><li>Better operations in production cycle and distribution </li></ul></ul><ul><li>Better lifestyle </li></ul><ul><ul><li>Greater level of wages paid by international players usually </li></ul></ul><ul><ul><li>More product variety </li></ul></ul><ul><ul><li>Newer product categories </li></ul></ul><ul><ul><li>Economies of scale to help lower consumer price </li></ul></ul><ul><ul><li>Increased purchasing capacity of consumers </li></ul></ul>Benefits of FDI Why FDI?
  28. 28. <ul><li>Manpower and skill development </li></ul><ul><ul><li>Through retail training and </li></ul></ul><ul><ul><li>Greater managerial talent inflow from other countries </li></ul></ul><ul><li>Tourism Development </li></ul><ul><ul><li>A strong retailing sector boosts tourism as seen from the experience of Singapore and Dubai </li></ul></ul><ul><li>Investment in whole supply chain </li></ul><ul><ul><li>Improved product basket from India for exports </li></ul></ul><ul><li>Long term benefits </li></ul><ul><ul><li>Up-gradation of agriculture </li></ul></ul><ul><ul><li>Development of efficient small and medium size industries </li></ul></ul>Benefits of FDI Why FDI?
  29. 29. Benefits to the government
  30. 30. <ul><li>Increase employment levels </li></ul><ul><ul><li>FDI would result in market growth and expansion </li></ul></ul><ul><ul><li>Employment generated at various levels </li></ul></ul><ul><ul><ul><li>Increased consumer demand implies employment generation across the value chain </li></ul></ul></ul><ul><ul><li>Does not need very high skill sets </li></ul></ul><ul><ul><ul><li>Needs high school graduates and other similar skill levels </li></ul></ul></ul><ul><ul><ul><li>Currently this is a majorly unemployed demographic group </li></ul></ul></ul><ul><ul><li>Boom in employment </li></ul></ul><ul><ul><ul><li>Similar to job generation in ITES industry </li></ul></ul></ul><ul><ul><ul><li>On a much larger scale </li></ul></ul></ul><ul><ul><ul><li>But new jobs comparatively lower down the value chain </li></ul></ul></ul>Benefits to govt. Benefits to the government
  31. 31. Agenda Retailing : An overview Indian retail The change factor FDI in Indian retailing Why FDI ? How FDI ? Case study : Chinese retail Recommendations
  32. 32. <ul><li>FDI should be allowed in stages </li></ul><ul><ul><li>Initial stages: 26% FDI </li></ul></ul><ul><ul><li>Establishment Phase: 49% FDI </li></ul></ul><ul><ul><li>Mature Phase: 100% FDI </li></ul></ul><ul><li>FDI policy </li></ul><ul><ul><li>No incentives needed to attract FDI </li></ul></ul><ul><ul><li>Market size and potential are sufficient inducers </li></ul></ul><ul><ul><li>No need for costly tax breaks, import duty exemptions, land and power subsidies, and other enticements </li></ul></ul>How FDI ? How FDI ? 2 yrs 2 yrs 2 yrs
  33. 33. Agenda Retailing : An overview Indian retail The change factor FDI in Indian retailing Why and why not FDI ? How FDI ? Case study : Chinese retailing Recommendations
  34. 34. <ul><li>FDI permitted in 1992. 40 foreign retailers have secured approval </li></ul><ul><ul><li>Retail sales have grown@13.5% CAGR since FDI was permitted </li></ul></ul><ul><li>FDI initially restricted to 6 major cities (including Beijing, Shanghai and Guangzhou) and SEZs </li></ul><ul><li>Foreign ownership initially restricted to 49% </li></ul><ul><li>US$ 22 bn of FDI attracted, 3.6% of total FDI </li></ul><ul><ul><li>In 2003, FDI in wholesale and retail was US$ 1.1 bn (Around 30% of our total FDI in 2003) </li></ul></ul><ul><li>Current restrictions on FDI will be phased out over 5 years as condition of WTO entry </li></ul>Chinese retailing Case study : Chinese retailing
  35. 35. 7 8 8 0 8 5 9 0 9 1 9 2 9 3 9 4 9 5 9 6 9 7 9 8 9 9 0 0 0 1 0 2 75 150 225 300 375 US$ bn Total wholesale and retail trade <ul><li>Retail sales grew @ 19.6% CAGR for the next 4 years after the introduction of FDI in 1992 </li></ul>Years FDI in retail allowed
  36. 36. China: The effect of FDI <ul><li>Modern formats have grown after FDI </li></ul><ul><li>But so have traditional players </li></ul>593 Hypermarkets 18,091 Convenience 152,194 13,079 Supermarkets 2,565,028 1,920,604  Traditional No. of stores in 2001 No. of stores in 1996 Type
  37. 37. Employment in retailing is increasing Source : China Statistical Yearbook 2001
  38. 38. <ul><li>Walmart </li></ul><ul><ul><li>Entered Chinese market in 1996 </li></ul></ul><ul><ul><li>Has 43 stores in 19 cities as on date </li></ul></ul><ul><ul><li>Had sales of US$ 704 mn in 2003 </li></ul></ul><ul><ul><li>Has employed more than 20,000 people </li></ul></ul><ul><ul><li>Has paid taxes of US$ 111 mn in total* </li></ul></ul><ul><li>Carrefour </li></ul><ul><ul><li>Has 54 stores as on date </li></ul></ul><ul><ul><li>Had sales of US$ 1.6 bn in 2003* </li></ul></ul>Chinese retailing Case study : Chinese retailing Source : company websites
  39. 39. <ul><li>Strong evidence in favor of FDI </li></ul><ul><ul><li>FDI improves the entire size of the industry </li></ul></ul><ul><ul><ul><li>Retailing in China has grown at a compound rate of 15% per annum after FDI inflow </li></ul></ul></ul><ul><ul><li>Employment growth </li></ul></ul><ul><ul><li>Evolution of modern formats </li></ul></ul><ul><ul><li>Local players can survive and even beat foreign competition </li></ul></ul><ul><ul><ul><li>Need for a strong retailing industry in India </li></ul></ul></ul><ul><ul><li>Scale is the key to success for local retailers </li></ul></ul>Lessons from China Lessons from China
  40. 40. Agenda Retailing : An overview Indian retail The change factor FDI in Indian retailing Why FDI ? How FDI ? Case study : Chinese retail Recommendations
  41. 41. <ul><li>Grant industry status to retail </li></ul><ul><li>Permit FDI in Retail in phases </li></ul><ul><li>Invest in supply chain infrastructure </li></ul><ul><li>Ease distribution – infrastructure creation, octroi </li></ul><ul><li>Ensure single window clearance for retail chains </li></ul><ul><li>Organize market for real estate </li></ul><ul><ul><li>Ensure proper rent laws </li></ul></ul><ul><ul><li>Enforce zoning laws and city development plan </li></ul></ul><ul><ul><li>Increase land supply </li></ul></ul><ul><li>Ensure flexibility of labor laws </li></ul>Recommendations Recommendations
  42. 42. <ul><li>THANK YOU </li></ul>
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