Fdi in indian mbrt
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The document discusses the debate around allowing FDI in multi-brand retail in India. It notes that in 2011 the Indian government announced allowing 100% FDI in single-brand retail and 51% in multi-brand retail, which faced opposition from political parties. Supporters argue that it could boost the economy by improving infrastructure and sourcing from local suppliers, as well as fuel growth as seen in other reforms. However, critics argue that it could threaten India's 12 million small retailers by crushing them under competition from global giants. The document examines both sides of the debate around the impacts of FDI in retail.
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Fdi in indian mbrt
- 1. Anand S. Thokal Rakesh B. R. 1
- 2. Indian Government (comprised of a coalition of political parties called the UPA) had announced (Nov 2011): 100 % FDI in single brand retail and 51 % FDI in multi-brand retail.. 2
- 3. This decision invoked a hue and cry all over.. 3
- 4. • Opposition political parties started threatening to STALL the Parliament Winter Session.. 4
- 5. • Even political leaders within the ruling UPA government DIVIDED on the issue.. eg. Kerala CM, Ramesh Chennithala & DMK leader Karunanidhi and others 5
- 6. But why is everyone so scared about it..?? Let’s start with the basics: 6
- 8. Indian Retail Scenario • The Rs 28,673 billion (US$ 470 billion) Indian retail market is only 3 per cent of Global retail…. Source: http://www.ibef.org/industry/retail.aspx 8
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- 21. Threats: • Global giants like WalMart will crush our unorganized retail sector.. (Which consists of around 12 million kirana stores in the country ) Source: www.indianretailing.com 21
- 24. • Hence, if we open up our retail sector, then our desi retailers and the millions of kirana stores will go out of business.. • Indians will be drained of all their hard earned money through consumerism.. • Money will be drained out of our country 24
- 25. A recent study by IIM-A and Tata Institute of Social Sciences says.. Source: Prof. Arbind Sahay (IIM-A) and Prof. Gordhan Saini (TISS) “Effect of credit and low price guarantee on consumer purchase intention -A comparative study of kirana store and modern retail store in an Emerging Market, 2011 25
- 26. • ‘While low price guarantee (LPG) is the attraction of malls, a majority of customers are ready to go to the kirana stores because of the credit facilities and the level of personalized service’ • kirana stores have a very strong “knowledge intimacy” with their customers 26
- 27. Indian Consumer Behavior • Indian consumer does NOT drive to the outskirts of the city in her big car at the end of each month to purchase her monthly groceries… • She sometimes goes to malls for the thrill and shopping experience, but her major chunk of purchases are from the unorganized sector.. 27
- 28. + Conditional FDI.. • The current FDI relaxation comes with a condition: 30% of sourcing of all products has to be done from Indian suppliers / SMEs.. • This recommendation can create much needed employment in India 28
- 29. Hence we don’t need to have.. 29
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- 31. FDI in retail can result into developing “farm- to-fork” infrastructure consisting of integrated storage, cold chain and transport links.. A much needed repair of our grossly leaking distribution system… 31
- 32. And, doesn’t this SITUATION over liberalization in retail industry remind us of.. 32
- 33. déjà vu…? • The big fuss before 1991 reforms…? • The big fuss before letting global telecom players enter Indian Telecom Industry before 2000…? 33
- 34. We know very well that these have actually fuelled The Great India Growth Story* *Not factoring in the great Indian 2G Scam… :-P 34
- 35. • What ultimately matters is : – Operational efficiencies.. – Best deal to the final customer.. – True globalization… 35
- 36. Recent Happenings • Sept 8, 2014: The Modi Government has decided to disallow foreign direct investment in multi-brand retail, Commerce and Industry Minister Nirmala Sitharaman said in New Delhi on Monday. • Dec 21, 2014: Industry estimates pegged the size of retail sector at $ 560 billion this year, growing by 10 per cent compared with last year. As per various estimates, the industry is now expected to reach $ one trillion mark by 2020, while this target was being eyed much earlier on hopes of FDI. • Jan 14, 2015: Prime Minister Narendra Modi will consolidate himself and is likely to open up the multi-brand retail sector to foreign investors in due course, noted economist and thinker Jagdish Bhagwati said on Tuesday. 36
- 37. Top Retailers in India • Reliance Retail Ltd. (Mumbai, 2006) • Pantaloons Retail Ltd. (Mumbai, 1997) • Provogue India Ltd. (Mumbai, 1997) • Shoppers Stop (Mumbai, 1991) • ITC (Kolkata, 1910) 37
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