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POLITICAL 
FACTORS 
AFFECTING 
FDI IN RETAIL 
IN INDIA 
• Abhilakshya Rawat 
• Akash Tekriwal 
• Mhd. Ayub 
• Saurabh Sharma 
• Soham Dham 
• Satwant Singh
Index 
 FDI 
Why countries seek FDI? 
 Retail Industries 
 FDI in India 
 Government Regulations 
 Benefits 
 Drawbacks 
 Conclusion
FDI(Foreign Direct Investment) 
 Investment into the business of a country 
by a company in another country 
 Feature-to seek control and have lasting 
interest 
 Investment can be made either by buying 
a company in the target country or by 
expanding operations of an existing 
business in that country
Why Countries Seek FDI ? 
 Domestic capital is inadequate for purpose of 
economic growth 
 Foreign capital is usually essential, at least as 
a temporary measure, during the period 
when the capital market is in the process of 
development 
 Foreign capital usually brings it with other 
scarce productive factors like technical know 
how, business expertise and knowledge
RETAIL INDUSTRY: Introduction 
The Retail Industry is the sector of economy which is 
consisted of individuals, stores, commercial complexes, 
agencies, companies, and organizations, etc., involved in 
the business of selling or merchandizing diverse finished 
products or goods to the end-user consumers directly and 
indirectly 
Retail 
Industry 
Organized Unorganized
RETAIL INDUSTRIES IN INDIA
FDI IN INDIA 
An Indian company may receive Foreign Direct 
Investment under the two routes as given under: 
 Automatic Route-FDI is allowed under the automatic 
route without prior approval either of the Government 
or the Reserve Bank of India in all activities/sectors as 
specified in the consolidated FDI Policy, issued by the 
Government of India from time to time. 
 Government Route-FDI in activities not covered under 
the automatic route requires prior approval of the 
Government which are considered by the Foreign 
Investment Promotion Board (FIPB), Department of 
Economic Affairs, Ministry of Finance.
FDI in Retailing in India
Government Regulation 
 Govt. allowed 51% FDI in multi brand retail and 
increased FDI limit in single brand retail from 49% to 
100%. 
 Minimum Investment to be done is $100 million. 
 50% of the investment should be done in improving 
the back end infrastructure. 
 30% of all raw materials have to be procured from 
the small and medium enterprises. 
 Permission to set retail stores only in cities with a 
minimum population of 10 lakhs 
 Govt. has the first right to procure material from the 
farmers.
MULTI BRAND AND SINGLE BRAND RETAIL 
 Beneficiary of FDI in Multi – Brand Retail: 
Multi Brand Retail Stores: 51% in multi brand retail. 
• Pantaloons Retail 
• Vishal Retail 
• Shoppers Stop 
• Koutons 
• Trent 
 Single Brand Retail: 100% FDI in Single Brand Retail. 
Archives 
Cantabil 
VIP Ind 
Titan 
IFB Industries
BACK END INFRASTRUCTURE 
 Back-end infrastructure includes activities like 
processing, manufacturing, distribution , design 
improvement quality control, packaging, logistics, 
storage, warehouse, agriculture market, etc. 
 It helps in overcoming supply chain inefficiency
Benefits 
 FDI could benefit stressed companies: 
FDI in multi brand will stimulate investment in the sector. There 
are companies in the retail sector that are reeling under debt. 
These companies could get fresh lease of life. 
Company Debt (Rs Crore) Market Cap 
Pantaloon 4,200 3, 867 
Vishal Retail 700 42 
Provogue 400 275
Benefits 
 Employment generation and increase in 
production 
 Help in capital formation by bringing fresh 
capital 
 Helps in transfer of new technologies, 
management skills, intellectual property 
 Increases competition within the local market 
and this brings higher efficiencies 
 Helps in increasing exports 
 Increases tax revenues 
 Improves FOREX position of the country
Drawbacks 
 Domestic companies fear that they may lose their 
ownership to overseas company 
 Small enterprises fear that they may not be able to 
compete with world class large companies and may 
ultimately be edged out of business 
 Large giants of the world try to monopolies and take 
over the highly profitable sectors 
 Such foreign companies invest more in machinery 
and intellectual property than in wages of the local 
people 
 Government has less control over the functioning of 
such companies as they usually work as wholly 
owned subsidiary of an overseas company
Conclusion 
FDI is development of the country at the 
cost of unemployment of the poor

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Fdi

  • 1. POLITICAL FACTORS AFFECTING FDI IN RETAIL IN INDIA • Abhilakshya Rawat • Akash Tekriwal • Mhd. Ayub • Saurabh Sharma • Soham Dham • Satwant Singh
  • 2. Index  FDI Why countries seek FDI?  Retail Industries  FDI in India  Government Regulations  Benefits  Drawbacks  Conclusion
  • 3. FDI(Foreign Direct Investment)  Investment into the business of a country by a company in another country  Feature-to seek control and have lasting interest  Investment can be made either by buying a company in the target country or by expanding operations of an existing business in that country
  • 4. Why Countries Seek FDI ?  Domestic capital is inadequate for purpose of economic growth  Foreign capital is usually essential, at least as a temporary measure, during the period when the capital market is in the process of development  Foreign capital usually brings it with other scarce productive factors like technical know how, business expertise and knowledge
  • 5. RETAIL INDUSTRY: Introduction The Retail Industry is the sector of economy which is consisted of individuals, stores, commercial complexes, agencies, companies, and organizations, etc., involved in the business of selling or merchandizing diverse finished products or goods to the end-user consumers directly and indirectly Retail Industry Organized Unorganized
  • 7. FDI IN INDIA An Indian company may receive Foreign Direct Investment under the two routes as given under:  Automatic Route-FDI is allowed under the automatic route without prior approval either of the Government or the Reserve Bank of India in all activities/sectors as specified in the consolidated FDI Policy, issued by the Government of India from time to time.  Government Route-FDI in activities not covered under the automatic route requires prior approval of the Government which are considered by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, Ministry of Finance.
  • 8. FDI in Retailing in India
  • 9. Government Regulation  Govt. allowed 51% FDI in multi brand retail and increased FDI limit in single brand retail from 49% to 100%.  Minimum Investment to be done is $100 million.  50% of the investment should be done in improving the back end infrastructure.  30% of all raw materials have to be procured from the small and medium enterprises.  Permission to set retail stores only in cities with a minimum population of 10 lakhs  Govt. has the first right to procure material from the farmers.
  • 10. MULTI BRAND AND SINGLE BRAND RETAIL  Beneficiary of FDI in Multi – Brand Retail: Multi Brand Retail Stores: 51% in multi brand retail. • Pantaloons Retail • Vishal Retail • Shoppers Stop • Koutons • Trent  Single Brand Retail: 100% FDI in Single Brand Retail. Archives Cantabil VIP Ind Titan IFB Industries
  • 11. BACK END INFRASTRUCTURE  Back-end infrastructure includes activities like processing, manufacturing, distribution , design improvement quality control, packaging, logistics, storage, warehouse, agriculture market, etc.  It helps in overcoming supply chain inefficiency
  • 12. Benefits  FDI could benefit stressed companies: FDI in multi brand will stimulate investment in the sector. There are companies in the retail sector that are reeling under debt. These companies could get fresh lease of life. Company Debt (Rs Crore) Market Cap Pantaloon 4,200 3, 867 Vishal Retail 700 42 Provogue 400 275
  • 13. Benefits  Employment generation and increase in production  Help in capital formation by bringing fresh capital  Helps in transfer of new technologies, management skills, intellectual property  Increases competition within the local market and this brings higher efficiencies  Helps in increasing exports  Increases tax revenues  Improves FOREX position of the country
  • 14. Drawbacks  Domestic companies fear that they may lose their ownership to overseas company  Small enterprises fear that they may not be able to compete with world class large companies and may ultimately be edged out of business  Large giants of the world try to monopolies and take over the highly profitable sectors  Such foreign companies invest more in machinery and intellectual property than in wages of the local people  Government has less control over the functioning of such companies as they usually work as wholly owned subsidiary of an overseas company
  • 15. Conclusion FDI is development of the country at the cost of unemployment of the poor