A S.W.O.T analysis of FDI in retail in India

1. Guided by : Dr Bishnupriya Mishra
Presented by : Siddharth Ray
FDI IN INDIAN RETAIL
SECTOR A - S.W.O.T
ANALYSIS

2.  Foreign direct investment (FDI) is a
direct investment into production or
business in a country by an individual or
company of another country, either by
buying a company in the target country or
by expanding operations of an existing
business in that country .
 It usually involves participation in
management , joint venture ,transfer of
technology and expertise.
 FDI can be used as one measure of
growing economic globalization.
What is FDI?

3. SINGLE BRAND RETAIL :
It implies that a retail store with foreign investment
can only sell one brand.
Eg. Nokia , Reebok and Adidas.
MULTI BRAND RETAIL :
Retail store can sell multiple brands under one
roof.
Global retailers like Wal – Mart , Carrefour and
Tesco can open stores offering a wide range of
household items and grocery directly to consumers
in the same way as the “ Kirana” stores..
Single and Multiple Brand Retail

4.  Retail industry – Second largest employer ( with an
estimated 35 million people engaged by the industry).
 The Union Cabinet on 24th Nov 2011 proposed to increase
FDI in multi brand to 51%.However government was put
to hold after strong opposition from several political
parties , including NDA and Trinamool Congress.
 New policy will allow multi brand foreign retailers to set
up shop only in cities with a population of more than 10
lakhs as per the 2011 census.( there are 53 such cities)
 The single brand retail FDI limit was increased from 51% to
100%
Present shape of FDI in retail in India

6. French MNC Retailer InsideWalmart (USA)
British MNC Retailer

7. (A)STRENGTHS of FDI Policy
(i) Fast growing economy
(ii) Employment opportunities will increase both directly and
indirectly
(iii)Farmers get better prices for their products through
improvement of value added food chain
(iv)It will also greatly contribute to large scale investments in
the real estate sector
(v) Large domestic market with an increasing middle class and
potential customers with purchasing power
(vi)The consumer get a better product at cheaper price ,so
consumers get value for their money
(vii)Presence of big industrial houses can absorb losses
S.W.O.T ANALYSIS

8. (B) WEAKNESS of FDI policy
(i) Will mainly cater to high-end consumers placed in
metros and will not deliver mass consumption goods for
customers in villages and small towns
(ii) Lack of trained and educated forces
(iii)Lack of Competition
(iv)More prices as compared to specialized shops
(v) The volume of sales in Indian retailing is very low
(vi)Retail chain are yet to settle down with proper
merchandise mix for the mall outlets
(vii)Small size outlets are also one of the weaknesses in the
Indian retailing, 96% of the outlets are lesser than 500
sq. ft.

9. (C) OPPORTUNITIES of FDI policy
(i) FDI can become one of the largest industries in
terms of numbers of employees and establishments
(ii) It will enhance the financial condition of farmers
(iii) Improve the competition
(iv) Result in increasing retailer’s efficiency
(v) Foreign capital inflows
(vi) Will bring along with it better technology and
branding with latest managerial skills
(vii)Quality improvement with cost reduction
(viii) Increase the exporting capacity
(ix) In the next 5 years India’s organized retail is
expected to grow thrice due to changing life style,
increase in income and favorable demographic
outline

10. (D) THREATS of FDI policy
(i) Threat to the survival of small retailers like ‘local
kirana’ or ‘mom n pop’ store
(ii) Work will be done by Indians and profits will go
to foreigners
(iii)Difficult to target all segments of society
(iv) Lack of uniform tax system for organized
retailing
(v) Problem of car parking in urban areas is serious
concern
(vi) Sector is unable to employ retail staff on
contract basis
(vii)The unorganized sector has dominance over the
organized sector because of low investment
needs

11.  FDI in retail is going to attract many foreign
players but the GOI must welcome them with a
talented pool of Human resources
 Protection must be given to small and medium
retailers as retailing is their source of livelihood
 The government must properly discuss about
the pros and cons of allowing 51% FDI in multi
brand retail with a law in place to control unfair
competition
 FDI will control inflation rate since it will prevent
the farm wastage which at present is around
30%-40% of total produce
Conclusion