Fdi in multi brand retailing in india-b.v.raghunandan


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Relevance of Foreign Direct Investment in Multi-Brand Retailing in India

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Fdi in multi brand retailing in india-b.v.raghunandan

  1. 1. Foreign Direct Investment in Multi- Brand Retailing in India -B.V.Raghunandan, SVS College, Bantwal Post-Graduate Department of Commerce, Government College, Barkur October 12, 2012
  2. 2. Classes of Foreign Investment • Foreign Institutional Investment • Foreign Direct Investment
  3. 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. 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. 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. 6. 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
  7. 7. • 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
  8. 8. 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
  9. 9. 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
  10. 10. 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
  11. 11. 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
  12. 12. THANK YOU