FDI in Indian retail market- oppertunities and challenges
FOREIGN DIRECT INVESTMENT IN INDIAN RETAIL MARKET -OPPORTUNITIES AND CHALLENGES BY A. GURU SELVAN N. RAM KUMAR III B.COM THIAGARAJAR COLLEGE
INDIAN RETAIL MARKET• Pillar of Indian economy• Accounts for 14 to 15 % of GDP• One of the top five retail markets in the world• 1.2 billion people are engaged in it• Employs about 40 million Indians.
FDI SCENARIO IN INDIAN RETAILINGGovernment of India has allowed 100% FDI in single brand retail100% in cash & carry only.Recently FDI in multi brand retail has been allowed at 51%.
COMBINATION OF INDIAN RETAIL MARKET 23% 31% Big Retailers Small Retailers Hawkers Push Cart 15% 31% Vendors
THE GENERAL IMPACTS OFFDI IN RETAILINGAccelerate retail market growthFarmers will benefitForeign brands will promote healthy competition in marketPush to InfrastructurePush to productivityCustomers feel that retail stores offer better deals
Regional players will develop their supply chain strategiesJoint ventures among retailers eases capital flowDevelops the different retail forms and modernizes the sectorLocal entrepreneurs get franchising opportunity for global products.promote India‘s manufacturing and export sectorsGives consumers a better value to goods at a competitive price
CHALLENGES OF FDI IN RETAILING• Indian retailers have to consolidate their position.• The import and export balance may be upset• predatory pricing of global retailers may wipe out the domestic retailers• employment in retail sector would be affected.• High cost of borrowings affect the investment of domestic retailers.• global players will give a cut-throat competition for the existing retailers.
conclusion• Retailing in India has its own challenges and opportunities• Small incompetent retail businesses within a geographical area will be affected by FDI.• Several small businesses that are competing by attracting more consumer will not be affected by FDI
When Indian retailers take these challenges asopportunities, they can beat the global players and even Wal- Mart is no exception to it.