Report on FDI in Indian Retail

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Globally, there has been significant change in the retail sector over the past two decades. Much of the rapid growth in organised retail business in the developing countries is due to the entry of global retailers. Indian retail industry is the largest industry in the private sector employing around 7% of total labour force and contributing to over 10% of the country's GDP.
It is six times bigger than Thailand and five times larger than South Korea and Taiwan. India is in the midst of a retail boom.

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Report on FDI in Indian Retail

  1. 1. REPORT on FDI in Retail and itsimplication on Indian Retail Industry Monika Bansal PGDM (2012-14)
  2. 2. PURPOSE OF REPORT “Report to highlight the implications of FDI in Indian retail on Indian economy on the basis of secondary information” Report on Implications of FDI in Indian10/16/2012 2 retail on Indian Economy
  3. 3. Globally, there has been significant change in the retail sector over the past two decades. Much of the rapid growth in organised retail business in the developing countries is due to the entry of global retailers. Indian retail industry is the largest industry in the private sector employing around 7% of total labour force and contributing to over 10% of the countrys GDP. It is six times bigger than Thailand and five times larger than South Korea and Taiwan. India is in the midst of a retail boom. Report on Implications of FDI in Indian10/16/2012 3 retail on Indian Economy
  4. 4. Benefits of FDI in retail Drawbacks of FDI in retail Inflow of investment and funds.  Would give rise to cut-throat Improvement in the quality of competition rather than promoting employment. incremental business. Generating more employment.  Promoting cartels and creating Increased local sourcing. monopoly. Provide better value to end  Increase in the real estate prices. consumers.  Marginalize domestic entrepreneurs. Investments and improvement in the  The financial strength of foreign supply chains and warehousing. players would displace the Franchising opportunities for local unorganized players. entrepreneurs.  Absence of proper regulatory Growth of infrastructure. guidelines would induce unfair trade Increased efficiency. practices like Predatory Cost reduction. Implementation of IT in retail. Stimulate infant industries and other supporting industries. 10/16/2012 Report on Implications of FDI in Indian 4 retail on Indian Economy
  5. 5. • Suitable lending to expand and improve efficiencies.• India may follow Chinese model which took12 years to open the retail sector completely to FDI.• Efforts should be made to improve manufacturing sector so as to absorb the dislocated workers from the unorganised retail sector due to FDI.• Regulations restricting real estate purchases, and cumbersome local laws.• Absence of developed supply chain and integrated IT management.• Lack of trained work force.• Low skill level for retailing management.• Intrinsic complexity of retailing – rapid price changes, constant threat of product obsolescence and low margins Report on Implications of FDI in Indian10/16/2012 5 retail on Indian Economy
  6. 6. Report on Implications of FDI in Indian10/16/2012 6 retail on Indian Economy

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