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  1. 1. FDI&IT’S DILEMMAPrepared by:Ravi Rai+91-9999497107ravi.rai_91@yahoo.com
  2. 2. INVESTMENT InvestmentDomestic Investment Foreign Investment Domestic Investment is done Foreign Direct Investment Foreign Institutional Investment in domestic currency (rupee in India). Investment done into production Investment done by small investors and or business in a country by financial companies in the financial company from another country. markets of India.
  3. 3. FOREIGN DIRECT INVESTMENT(FDI) Wikipedia Says: It is direct investment into production or business in a country by a company in another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Advantages Disadvantages  DI will generate employment in  Allowing foreign players could the country it invests destroy the livelihoods of millions of small store owners  It could benefit farmers by eliminating middlemen  Market prices could be manipulated by foreign retail  FDI gives consumers a wide giants variety of products to choose from at reasonable prices  Local jobs could be at threat since the foreign players could  It can improve food distribution purchase many products from systems abroad  FDI can bring in better quality  There is no established and standard products correlation between advent of  FDI can increase the standard FDI and improvement of a of living through its goods and country’s infrastructure services
  4. 4. FDI IN RETAIL: AN INDIAN PERSPECTIVEGainers: General consumers: They are the biggest gainers as they will receive world class services at competitive price, better quality products and they will be better informed about the product content. Real estate agents and developers: The slow down real estate industry will benefit immensely due to increase in demand. Developers were finding difficult to find buyer for their unutilised space so perhaps this is the best news for them as it will help them to fill their vacant space in their shopping malls Economy on the whole will gain momentum as foreign investment along with the required skills is coming into the country, consumers are benefiting, supply chain system will improve, better logistics and warehousing facilities in the country, quality food, jobs to the middle class and it can be expected that farmers will get good price and contract farming concept may develop in India.
  5. 5. CONTINUED…Losers: Majority of the Indian small-scale industries or manufacturers will be forced to shut down and Indian manufacturing jobs will be lost as MNC retail brand in order to compete would prefer to source 2/3rd of their products cheaper from outside the country such as China Majority of small traders and shopkeepers will end up closing their shops, stores and lower middle class workers would end up losing their jobs as the Illiteracy level among them is very high. Contrary to the most people belief, International brands such as Wal-Mart won’t be able to make any profits out of it for at least in the next 5 to 10 years they would only see the losses considering the low purchasing power and transaction value, uncertainty in the Indian political scenario, unrealistic rental and real estate pricing and heterogeneous consumer consumption in south, north east and western states in India.
  7. 7. CONCLUSIONFDI in retail looks promising but we need to analysisthe effects in long run. While doing so, some seriousquestion arises: Will FDI bring in the desired quality & optimum price? Large investors can influence government in long run? What if company increases their product’s price after acquiring substantial share in market? Repayment of profit will lead to outflow of foreign exchange? What about FDI in infrastructure, capital projects, etc?
  8. 8. THANKS