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Fdi
The document discusses foreign direct investment (FDI) and the retail industry in India. It provides definitions and explanations of key terms like FDI, organized and unorganized retail, and different retail formats in India. It also discusses the debate around allowing FDI in multi-brand retail in India, including arguments from supporters and opponents of FDI. The Indian retail sector is large but highly fragmented, with most business run through small unorganized retailers. The organized retail sector is growing rapidly but still nascent.
Fdi
- 1. . Presented to: Presentedby: Prof.Rupesh Gupta Rahul Roy
- 2. WHAT IS FDI? Foreigndirect investment (FDI) is investment directly into production in a country by a company located in another country, By buying a company in the target country By expanding operations of an existing business in that country It is cross border investment Where foreign assets are invested into the organizations of the domestic market excluding the investment in stock. An Introduction Foreign direct investment (FDI) is investment directly into production in a country by a company located in another country, By buying a company in the target country By expanding operations of an existing business in that country It is cross border investment Where foreign assets are invested into the organizations of the domestic market excluding the investment in stock. .
- 3. Avoiding foreigngovernment pressure for local production. Circumventing trade barriers, hidden and otherwise. Making the move from domestic export sales to a locally- based national sales office. Capability to increase total production capacity. Opportunities for co-production, joint ventures with local partners, joint marketing arrangements, licensing, etc; Why is FDI important for any consideration of going global? The simple answer is that making a direct foreign investment allows companies to accomplish several tasks: Avoiding foreign government pressure for local production. Circumventing trade barriers, hidden and otherwise. Making the move from domestic export sales to a locally- based national sales office. Capability to increase total production capacity. Opportunities for co-production, joint ventures with local partners, joint marketing arrangements, licensing, etc; .
- 4. RETAIL INDUSTRY The Retailsector of India is vast, and has huge potential for development, as the majority of its constituents are un-organized. The retail sector of India contributes about 15% to the national GDP, and employs a massive workforce of it, after the agriculture sector. Retail Sector in India: The Retail sector of India is vast, and has huge potential for development, as the majority of its constituents are un-organized. The retail sector of India contributes about 15% to the national GDP, and employs a massive workforce of it, after the agriculture sector. .
- 5. RETAIL INDUSTRY The retailsector of India handles about $250 billion every year, and is expected by veteran economists to reach to $660 billion by the year 2015. The business in the organized retail sector of India is expected to grow at the rate of 15-20% every year, and can reach the level of $100 billion by the year 2015. Retail Sector in India: The retail sector of India handles about $250 billion every year, and is expected by veteran economists to reach to $660 billion by the year 2015. The business in the organized retail sector of India is expected to grow at the rate of 15-20% every year, and can reach the level of $100 billion by the year 2015. .
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- 7. DIVISION OF RETAILINDUSTRY – ORGANIZED AND UN ORGANIZED RETAILING Organized Retailing organized retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate- backed hypermarkets and retail chains, and also the privately owned large retail businesses. Un organized Retailing Un organized retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc. The retail industry is mainly divided into:- . Organized Retailing organized retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate- backed hypermarkets and retail chains, and also the privately owned large retail businesses. Un organized Retailing Un organized retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc.
- 8. RETAIL INDUSTRY The Indianretail sector is highly fragmented with 97 per cent of its business being run by the Un organized retailers. The organized retail however is at a very nascent stage. The sector is the largest source of employment after agriculture, and has deep penetration into rural India generating more than 10 per cent of India’s GDP. Retail Sector in India: The Indian retail sector is highly fragmented with 97 per cent of its business being run by the Un organized retailers. The organized retail however is at a very nascent stage. The sector is the largest source of employment after agriculture, and has deep penetration into rural India generating more than 10 per cent of India’s GDP. .
- 9. RETAIL FORMATS ININDIA They are family owned business catering to small sections; they are individually handled retail outlets and have a personal touch. Mom-and-pop stores (Kirana store): . They are family owned business catering to small sections; they are individually handled retail outlets and have a personal touch.
- 10. RETAIL FORMATS ININDIA These are general retail merchandisers offering quality products and services. Departmental stores: . These are general retail merchandisers offering quality products and services.
- 11. RETAIL FORMATS ININDIA The biggest form of retail in India, malls offers customers a mix of all types of products and services including entertainment and food under a single roof. Shopping malls: . The biggest form of retail in India, malls offers customers a mix of all types of products and services including entertainment and food under a single roof.
- 12. RETAIL FORMATS ININDIA Are retailers providing online buying and selling of products and services. E-traders: . Are retailers providing online buying and selling of products and services.
- 13. RETAIL FORMATS ININDIA These are factory outlets that give discount on the MRP. Discount stores: . These are factory outlets that give discount on the MRP.
- 14. RETAIL FORMATS ININDIA It is a relatively new entry, in the retail sector. Here beverages, snacks and other small items can be bought via vending machine. Vending: . It is a relatively new entry, in the retail sector. Here beverages, snacks and other small items can be bought via vending machine.
- 15. RETAIL FORMATS ININDIA Small specialty stores that offer a variety of categories. They are known as category killers as they focus on specific categories, such as electronics and sporting goods. E.g. Selection Centre Sports, Strand Book Store Category killers: . Small specialty stores that offer a variety of categories. They are known as category killers as they focus on specific categories, such as electronics and sporting goods. E.g. Selection Centre Sports, Strand Book Store
- 16. RETAIL FORMATS ININDIA These are retail chains dealing in specific categories and provide deep assortment. Mumbai's Crossword Book Store and RPG's Music World are a couple of examples. Specialty stores: . These are retail chains dealing in specific categories and provide deep assortment. Mumbai's Crossword Book Store and RPG's Music World are a couple of examples.
- 17. DIFFERENCES IN SINGLEBRAND RETAIL AND MULTI BRAND RETAIL: Nike Company opens outlets in Ahmadabad, Bangalore, Delhi and Mumbai selling nothing but Nike Shoes, Nike wrist-watches and Nike t-shirts only. This is single brand retail. FDI in Single-Brand Retailing was permitted in 2006, to the extent of 51%. These were mostly outlets for sportswear, luxury goods, apparel, fashion clothing, jewellery, hand bags, life-style products. Single Brand Retail: Nike Company opens outlets in Ahmadabad, Bangalore, Delhi and Mumbai selling nothing but Nike Shoes, Nike wrist-watches and Nike t-shirts only. This is single brand retail. FDI in Single-Brand Retailing was permitted in 2006, to the extent of 51%. These were mostly outlets for sportswear, luxury goods, apparel, fashion clothing, jewellery, hand bags, life-style products. .
- 18. DIFFERENCES IN SINGLEBRAND RETAIL AND MULTI BRAND RETAIL: But neither the Political parties nor Local Kiranawala raised any voice against this, why? Because these are ‘high-end’ luxury items for brand conscious upper middle class and rich class people. It doesn’t hurt population at large. It was not like people would stop purchasing from local garment store to get Nike or Adidas. Single Brand Retail: But neither the Political parties nor Local Kiranawala raised any voice against this, why? Because these are ‘high-end’ luxury items for brand conscious upper middle class and rich class people. It doesn’t hurt population at large. It was not like people would stop purchasing from local garment store to get Nike or Adidas. .
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- 20. DIFFERENCES IN SINGLEBRAND RETAIL AND MULTI BRAND RETAIL: Big Bazaar opens mall in above cities: selling t-shirts of multiple-brands such as Reebok, Nike, Adidas, Allen Solley, Van Huesen, Peter England etc. +and+ they also sell unbranded t-shirts (you know those buy one get three t-shirts free from unknown companies.) So this is multi-brand retail: when an outlet sells a product (t-shirt, tie, shoes anything) of more than one brand. Multi Brand Retail: Big Bazaar opens mall in above cities: selling t-shirts of multiple-brands such as Reebok, Nike, Adidas, Allen Solley, Van Huesen, Peter England etc. +and+ they also sell unbranded t-shirts (you know those buy one get three t-shirts free from unknown companies.) So this is multi-brand retail: when an outlet sells a product (t-shirt, tie, shoes anything) of more than one brand. .
- 21. MULTI BRAND RETAILERSIN INDIA
- 22. FDI IN RETAILINGIN INDIA: In December 2011, under pressure from the opposition, Indian government placed the retail reforms on hold till it reached a consensus. In January 2012, India approved reforms for single-brand stores welcoming anyone in the world to innovate in Indian retail market with 100% ownership, but imposed the requirement that the single brand retailer source 30% of its goods from India. Until 2011, Indian central government denied Foreign Direct Investment (FDI) in multi-brand retail, forbidding foreign groups from any ownership in supermarkets, convenience stores or any retail outlets. Even single-brand retail was limited to 51% ownership and a bureaucratic process. These market reforms paved the way for retail innovation and competition with multi-brand retailers such as Wal-Mart, Carrefour and Tesco, as well single brand majors such as IKEA, Nike, and Apple In December 2011, under pressure from the opposition, Indian government placed the retail reforms on hold till it reached a consensus. In January 2012, India approved reforms for single-brand stores welcoming anyone in the world to innovate in Indian retail market with 100% ownership, but imposed the requirement that the single brand retailer source 30% of its goods from India. Until 2011, Indian central government denied Foreign Direct Investment (FDI) in multi-brand retail, forbidding foreign groups from any ownership in supermarkets, convenience stores or any retail outlets. Even single-brand retail was limited to 51% ownership and a bureaucratic process. These market reforms paved the way for retail innovation and competition with multi-brand retailers such as Wal-Mart, Carrefour and Tesco, as well single brand majors such as IKEA, Nike, and Apple .
- 23. FDI IN RETAILINGIN INDIA: .
- 24. IMPACT OF FDI: DIFFERENT POINTS OF VIEW Benefit Fresh produce Local source Consistent quality Safer food Value for money Lower cost compared to open market buys Government Argument Benefit Fresh produce Local source Consistent quality Safer food Value for money Lower cost compared to open market buys .
- 25. CONTROVERSY LEAD TOTHREATS Work will be done by Indians, profits will go to foreigners. Like the East India Company, Wal-Mart could enter India as a trader and then take over politically. There will be sterile homogeneity and Indian cities will look like cities anywhere else. The government hasn't built consensus. Dual effect on unemployment , Development & Economy Work will be done by Indians, profits will go to foreigners. Like the East India Company, Wal-Mart could enter India as a trader and then take over politically. There will be sterile homogeneity and Indian cities will look like cities anywhere else. The government hasn't built consensus. Dual effect on unemployment , Development & Economy 25
- 26. “The language thatthe BJP has employed to threaten foreign investors is condemnable, very regrettable and tantamount to verbal lumpenism. To say that governments will change in states after recent elections and new government may cancel decisions taken by the Centre on FDI is against the spirit of democratic polity....this indicates their dictatorial mindset of my way or highway” “The language that the BJP has employed to threaten foreign investors is condemnable, very regrettable and tantamount to verbal lumpenism. To say that governments will change in states after recent elections and new government may cancel decisions taken by the Centre on FDI is against the spirit of democratic polity....this indicates their dictatorial mindset of my way or highway” “The language that the BJP has employed to threaten foreign investors is condemnable, very regrettable and tantamount to verbal lumpenism. To say that governments will change in states after recent elections and new government may cancel decisions taken by the Centre on FDI is against the spirit of democratic polity....this indicates their dictatorial mindset of my way or highway” “The language that the BJP has employed to threaten foreign investors is condemnable, very regrettable and tantamount to verbal lumpenism. To say that governments will change in states after recent elections and new government may cancel decisions taken by the Centre on FDI is against the spirit of democratic polity....this indicates their dictatorial mindset of my way or highway” Manmohan Singh, Prime Minister of India
- 27. “There was atime when even the entry of computers was resisted in the belief that it would lead to a loss of jobs. If FDI can unleash the true potential of agricultural value chain, we must welcome it. As far as the kirana store is concerned, let us not underestimate Indian ingenuity. Wal-mart can co-exist with the small shop, each adding to customer choice.” “There was a time when even the entry of computers was resisted in the belief that it would lead to a loss of jobs. If FDI can unleash the true potential of agricultural value chain, we must welcome it. As far as the kirana store is concerned, let us not underestimate Indian ingenuity. Wal-mart can co-exist with the small shop, each adding to customer choice.” “There was a time when even the entry of computers was resisted in the belief that it would lead to a loss of jobs. If FDI can unleash the true potential of agricultural value chain, we must welcome it. As far as the kirana store is concerned, let us not underestimate Indian ingenuity. Wal-mart can co-exist with the small shop, each adding to customer choice.” “There was a time when even the entry of computers was resisted in the belief that it would lead to a loss of jobs. If FDI can unleash the true potential of agricultural value chain, we must welcome it. As far as the kirana store is concerned, let us not underestimate Indian ingenuity. Wal-mart can co-exist with the small shop, each adding to customer choice.” Rajan Mittal, MD, Bharti Enterprises
- 28. BIBLIOGRAPHY: Print Media: 1.The Times Of India 2. The Hindu Electronic Media: 1. NDTV 24X7 2. Times Now 3. Headlines Today 4. CNN IBN Print Media: 1. The Times Of India 2. The Hindu Electronic Media: 1. NDTV 24X7 2. Times Now 3. Headlines Today 4. CNN IBN .
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