Foreign Direct Investment is the hot topic in india, many people are having doubt that whether FDI policies will benefit India or not. In order to know full details regarding FDI then please have look into this slides
The commitment of money or
capital to purchase financial
instruments or assets in order to
gain profitable returns.
Investment done by citizens and
government of one country (home
country) invest in industries of
another country (host country).
No permission required
Approval /License required.
• One of the world's largest industries exceeding US$ 9
• Dominated by developed countries.
• 47 global fortune companies & 25 of Asia's top 200
companies are retailers.
• US, EU & Japan constitute 80% of world retail sales.
• Retail trade in Europe employs 15% of the European
workforce (3 million firms and 13 million workers).
• The world’s population is poised to expand 50% by 2050.
The world currently comprises of 78% poor, 11% middle
income and 11% rich.
Indian Retail Industry
trading activities undertaken by licensed retailers, that is, those who
are registered for sales tax, income tax, etc.
traditional formats of low-cost retailing, for example, the local Kirana shops,
owner operated general stores, paan/beedi shops, convenience stores, hand
cart and pavement vendors, etc.
Offering basket of product
Spencers, Big bazaar
Cash and Carry
Large layout, Wide merchandise
Lifestyle , Globus
Household product as well as food
as integral part of the service
Apna bazaar , food
Shops located in shopping malls
Navras ( big bazaar)
Focus on individual product type
Branded product at discounted
Small Retail stores
In and out
Food and grocery
Reliance fresh, Café
brio, food bazaar
Clothing, textile and
Viveks, vijay sales,
The mobile store,
India is a developing country.
Indian market is very large market
Retail is the topmost growing market in India
The environmental and political factors are not that much
bad in India.
Tax breaks, import duty exemptions, land and power
subsidies, and other enticements.
The total retail sales in India will grow from US$
395.96 billion in 2011 to US$ 785.12 billion by 2015
Accounts for 14% of countries GDP
Accounts for 8% of countries employment
• 100% FDI is allowed in wholesale cash and
• 51% FDI in single brand retail
• No FDI in multi brand retail
WHAT WILL HAPPEN TO RETAIL TRADE
These companies open chain of shops. With a shop in each area the retail small
shopkeepers will be put to heavy loss
Slowly the local shops will start closing down.
These shops will capture the trade.
In countries where they have established their market share is
Name of Country
% of Market Share
Imagine Roadside DHABA’s after RELIANCE FOOD CHAIN Starts working.
WHAT WILL HAPPEN TO
LOCAL RETAIL TRADE
No of Retail outlets Between 1981-99 in United Kingdom came
down from 56862 to 25800.
Between 1970-80 in Europe about 4 lakhs Retail shops were
Competition shall be limited to Big Retail Houses
In the year 2000 Five Big Fast food companies captured following
percent market share :
WHAT HAPPENED IN THAILAND
In price war traditional shop keepers are facing problem of survival. Many
small shop keepers have closed down their shops.
Big companies have seen growth of 40%
There was adverse impact on 60000 small shopkeepers.
The Prime Minister of Thailand agreed that there was adverse impact on
The Govt. which had opened its door for FDI in retail trade with big bang
had to provide financial assistance to retail traders by establishing a special
Now its India’s turn
Threat on unorganized retail players
Threat on organized retail players
Marginalize the domestic players
Huge spread of retail chain stores
Monopoly in the customer market and can be converted into cartel of
Monopoly among suppliers
FDI in organized multi brand retail:
India not yet ready
There are about 35 towns in India with population exceeding 1 million.
There are at least 4, 32,000 people employed in these towns in India in
small-scale to medium-scale shops. With the entry of big chains, many of
them will lose jobs.
In food retail, farmers (the producers right at the tip of the back end chain)
being left at the mercy of the foreign investors
Inflation cannot be checked:
The point is that inflation cannot be checked as consumers would still have
to bear the cost
WHO ARE WE LETTING IN?
Annual turnover $ 400 bn
18 lakh rs. crores
Annual turnover $ 130 bn
5.85 lakh rs. Crores
Brief Introduction Of IKEA
These are some of the ferocious, predatory companies in the world.
Their practices in the market are ruthless and designed to wipe out
Their resources are enormous. They can invest and lose money for
years till then lakh of local retailers will be wiped out.
Comparison between Wal-mart and Indian
The annual turnover of Wal-Mart (Sales in 2010 were $409 billion) is
higher than the size of Indian retail industry (estimated at about $370
billion) and almost 100times more than the turnover of HUL (India's
largest FMCG company).
The size of any Wal-Mart store is much higher than the size of any
existing shopping mall in India.
Wal-Mart has over 8500 stores (over 95 million square meters) where
as none of India's large format store (Shoppers' Stop, Westside,
Lifestyle) have more than 250.
New stores opened annually by Wal-Mart are about 600, much higher
than all organized Indian retailers put together.
Wal-Mart has around 40,000 suppliers throughout the world and
more than 700,000 SKU's on its web site, a number that cannot be
Daily customers are about 18 million (almost equivalent to Mumbai's
Time between each Barbie Sale at Wal-Mart is just two seconds (same
rate at which babies are produced in India!)
None of the Indian organized retailer has ventured overseas where as
Wal-Mart is now in 15 countries and will expand to 21 countries in two
arguments in favor of FDI
Factors necessitates FDI in India
To achieve expected growth in Indian GDP by
To reduce gap between farm prices and final retail prices
through structural change in distribution - Inflation
To acquire market-savvy, market-intelligent and best
To bring trade balance
To increase liquidity by the way of foreign exchange
Modernize the supply chain
Will bring healthy competition in market
arguments against of FDI
Main THREAT to the local companies
FDI will drain out the country’s share of revenue to
foreign countries which may cause negative impact on
India’s overall economy.
An economically backward class person suffers from
Will Prices reduce for consumers is the Big
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