helpfull

1. POLITICAL
FACTORS
AFFECTING
FDI IN RETAIL
IN INDIA
• Abhilakshya Rawat
• Akash Tekriwal
• Mhd. Ayub
• Saurabh Sharma
• Soham Dham
• Satwant Singh

2. Index
 FDI
Why countries seek FDI?
 Retail Industries
 FDI in India
 Government Regulations
 Benefits
 Drawbacks
 Conclusion

3. FDI(Foreign Direct Investment)
 Investment into the business of a country
by a company in another country
 Feature-to seek control and have lasting
interest
 Investment can be made either by buying
a company in the target country or by
expanding operations of an existing
business in that country

4. Why Countries Seek FDI ?
 Domestic capital is inadequate for purpose of
economic growth
 Foreign capital is usually essential, at least as
a temporary measure, during the period
when the capital market is in the process of
development
 Foreign capital usually brings it with other
scarce productive factors like technical know
how, business expertise and knowledge

5. RETAIL INDUSTRY: Introduction
The Retail Industry is the sector of economy which is
consisted of individuals, stores, commercial complexes,
agencies, companies, and organizations, etc., involved in
the business of selling or merchandizing diverse finished
products or goods to the end-user consumers directly and
indirectly
Retail
Industry
Organized Unorganized

6. RETAIL INDUSTRIES IN INDIA

7. FDI IN INDIA
An Indian company may receive Foreign Direct
Investment under the two routes as given under:
 Automatic Route-FDI is allowed under the automatic
route without prior approval either of the Government
or the Reserve Bank of India in all activities/sectors as
specified in the consolidated FDI Policy, issued by the
Government of India from time to time.
 Government Route-FDI in activities not covered under
the automatic route requires prior approval of the
Government which are considered by the Foreign
Investment Promotion Board (FIPB), Department of
Economic Affairs, Ministry of Finance.

8. FDI in Retailing in India

9. Government Regulation
 Govt. allowed 51% FDI in multi brand retail and
increased FDI limit in single brand retail from 49% to
100%.
 Minimum Investment to be done is $100 million.
 50% of the investment should be done in improving
the back end infrastructure.
 30% of all raw materials have to be procured from
the small and medium enterprises.
 Permission to set retail stores only in cities with a
minimum population of 10 lakhs
 Govt. has the first right to procure material from the
farmers.

10. MULTI BRAND AND SINGLE BRAND RETAIL
 Beneficiary of FDI in Multi – Brand Retail:
Multi Brand Retail Stores: 51% in multi brand retail.
• Pantaloons Retail
• Vishal Retail
• Shoppers Stop
• Koutons
• Trent
 Single Brand Retail: 100% FDI in Single Brand Retail.
Archives
Cantabil
VIP Ind
Titan
IFB Industries

11. BACK END INFRASTRUCTURE
 Back-end infrastructure includes activities like
processing, manufacturing, distribution , design
improvement quality control, packaging, logistics,
storage, warehouse, agriculture market, etc.
 It helps in overcoming supply chain inefficiency

12. Benefits
 FDI could benefit stressed companies:
FDI in multi brand will stimulate investment in the sector. There
are companies in the retail sector that are reeling under debt.
These companies could get fresh lease of life.
Company Debt (Rs Crore) Market Cap
Pantaloon 4,200 3, 867
Vishal Retail 700 42
Provogue 400 275

13. Benefits
 Employment generation and increase in
production
 Help in capital formation by bringing fresh
capital
 Helps in transfer of new technologies,
management skills, intellectual property
 Increases competition within the local market
and this brings higher efficiencies
 Helps in increasing exports
 Increases tax revenues
 Improves FOREX position of the country

14. Drawbacks
 Domestic companies fear that they may lose their
ownership to overseas company
 Small enterprises fear that they may not be able to
compete with world class large companies and may
ultimately be edged out of business
 Large giants of the world try to monopolies and take
over the highly profitable sectors
 Such foreign companies invest more in machinery
and intellectual property than in wages of the local
people
 Government has less control over the functioning of
such companies as they usually work as wholly
owned subsidiary of an overseas company

15. Conclusion
FDI is development of the country at the
cost of unemployment of the poor