1. MANAGERIAL ECONOMICS

2. Content
FDI & its types
FDI in India
Procedure for entering in India through FDI
Sector wise presence and analysis
FDI policies w.r.t. RETAIL sector by Govt. of India
International Retail Brands/cos. – Present in India through FDI
Cos. In-Process to come in India
The outcomes of the policies – Advantages & Disadvantages
Case Study of Walmart & Tesco- Their challenges and our advantages
Study & Survey of Indian Consumers & Small & Medium Enterprises
(SME) –shops and retailers
Conclusion
Bibliography

3. Direct investment
into the production
or business in a
country by an
individual or
company of another
country
It includes:
• Mergers and
Acquisitions
• Building new
facilities
• Reinvesting profits
earned from
overseas
operations
• Intra company
loans
In regard to the GDP
equation:
Y= C+I+G+(X-M)
I= Domestic +
Foreign Investment
FDI is the net inflow
of foreign investment
i.e. Inflow - Outflow.

4. Horizontal
FDI
Vertical
FDI
Platform
FDI

5. • Foreign direct investment was introduced in India
in 1991 under the Foreign Exchange Management
Act(FEMA).
• A foreign company entering India through-
wholesale cash and carry
wholly-owned subsidiary in manufacturing,
licensing and distribution agreements
 joint ventures for each brand
 franchising and commission agents

6. • No prior approval of
the Government or RBI
required.
AUTOMATIC
ROUTE
• Prior approval of the
Government required
by applying to the FIPB.
GOVERNMENT
ROUTE

7. Allowed
• Defence Sector- 26%
• Insurance Sector- 49%
• Telecom Services- 100%
• Tea Plantations- 100%
• Asset Reconstruction – 100%
• Petroleum and natural gas- 49%
• Commodity Exchange- 49%
• Power Exchange- 49%
• Stock Exchanges- 49%
• Credit Information Companies-
74%
• Courier Services- 100%
• Single Brand Retailing- 100%
• Multi Brand Retailing- 51%
Prohibited
• Atomic Energy
• Lottery
• Gambling and Betting
• Chit fund
• Nidhi Company
• Agricultural and Plantation
activities(with exceptions)
• Housing and Real Estate(with
exceptions)
• Trading in Transferrable
Development Rights(TDRs)
• Manufacture of cigars and
cigarettes of tobacco and tobacco
substitutes

8. E-COMMERCE companies
can engage only in B2B &
not retail trading
Test Marketing of such
items has approval for
manufactures for period
of two years

13. Growth in Economy
Job Opportunities
Benefits to Farmers
Benefits to consumers
Lack of Infrastructure
Cheaper Production facilities
Availability of new technology
Long term cash liquidity
Conducive for the country’s economic growth
FDI opens up a new avenue for Franchising
Proper tax system
Minimum source of 30% of goods from Indian micro &small industries
Foreign countries create supply chain management in Indian market
Avoidance of food wastage and perishables

15. Impact on the organised players
Limited Employment Generation
Fear of lowering of prices
Draining of Revenue to foreign countries
Fear of incompetitiveness
Monopoly of Supermarkets
Dilution of 30% sourcing policy

16. Walmart
TESCO

17. • Largest public corporation by revenue in world with 1.3m
employees
• JV with Bharti could give Wal Mart access to 8th largest retail market
in world valued $320 billion.
• Plans to extend its cash and carry store presence to smaller cities
• Plans to continue to focus on its backend supply chain to minimize
wastage and to improve operational efficiency.
• Plans to leverage the differences in culture, lifestyle, taste, and food
preferences amongst the Indian consumers in an effort to penetrate
the Indian market effectively.

18. Their Challenges-
• Competitors: Future Group, RPG, Reliance Retails, Aditya Birla Group
• Reliability on its own distribution system (30% back-end invt.)
• Government policy may slow down growth
• Loss in Germany & South-Korea Next 5yrs- Reliance intends opening
more stores (around 6,000) & Wal –Mart has planned 140 stores
• Cap of 25% on sales of cash-and-carry players to front-end retail
companies owned by their Indian joint venture partners – Change in
JV agreement ; Reduced Investment
Our Advantages-
• The winning strategy- selling branded products at low cost.
• Non dependence on any single vendor
• Boost Employment
• They pay producers more and charge consumers less.

19. • 3rd largest British
multinational grocery and general
merchandise retailer
headquartered in England
• TESCO’s 50 per cent stake in Trent
Hypermarket Ltd with$100 million
• Star Bazaar, Star Daily or Star
Market in Maharashtra and
Karnataka Trent Vice-Chairman Noel Tata
&
Tesco CEO Philip Clarke

20. Their Challenges-
• 50-50 partnership proposal to Foreign Investment
Promotion Board
• Domestic sourcing norms
• Restrictions on Products allowed for sale
Our Advantages-
• Trent’s shares closed at Rs 1,066.55, UP 7%, on BSE.
• Hypermarkets are to be converted to UK-branded
outlets.

22. • Objective: To understand the competitive level of
our SME retailers & receive general feedback
• Survey of 17 small and medium sized stores
• Region: Navi Mumbai, Chembur, Bandra, Andheri
• Respondents: Shop owners & Store Managers

23. Are you aware about international supermarkets
entering Indian retail market?
15
2
YES
NO

24. Are you in favor of FDI in Retail Sector?
4
3.2
YES
NO

25. Do you agree it will contribute to country’s growth?
(employment opportunities, farmers
benefits, technological advancements, etc.)
8
9
YES
NO

26. Do you think it will affect your business? If Yes, How?
YES
NO
12
1
5
8
0
2
4
6
8
10
12
14
Shift of customers Change in prices of
goods
Change in profit
margins on non-
MRP goods
Extreme
competition w.r.t.
abundance of
choices per
product

27. What precautionary measures are you taking to
maintain your business and keep it competitive?
0
1
2
3
4
5
6
7
8
Free Home
Delivery /
Order on
phone
Attractive
Offers &
Discounts
Bargaining
Benefit
Credit Sale
8 8
3
5

28. • Healthy competition for Indian Retail Giants-
Future Group, Aditya Birla, etc.
• Cut-throat competition for small & medium
enterprises retailers
• No concrete policies to safeguard the small &
medium enterprises retailers
• Encouraging facet for regular shoppers

30. • www.investopedia.com
• www.moneycontrol.com
• www.livemint.com
• www.bloomberg.com
• http://articles.economics.indiatimes.com
• www.wikipedia.org
• The Wal –Mart Way : Don Soderquist
• http://www.firstpost.com/business/all-you-need-to-
know-about-the-tesco-tata-trent-deal-
1293267.html?utm_source=ref_article