This document discusses foreign direct investment (FDI) in the retail sector in India. It begins by defining FDI and describing the different types of retail markets and formats in India. The current FDI policy for retail is outlined, allowing up to 100% in single-brand retail and 51% in multi-brand retail. The advantages and disadvantages of FDI in retail for India are discussed. Recent FDI trends show growth in specialty retail stores, the continued dominance of unorganized retail, and expansion of retail into small cities and towns.

1. Title:
FDI in RETAIL
Presented by:1. Ajay Thakare
2. Piyush Zade
3. Megha Zade
Under the guidance of Prof. Rossy Mathur
INCON 2014

2. Objectives of our study
• To Know the reasons for investing retail
industry in India.
• To Analyze the impact of FDI in retail sector in
India.
• To Study the trends in FDI in different sector in
India.

3. Introduction
What is the meaning of FDI ?
The Foreign Direct Investment means “cross
border investment made by a resident in one
economy in an enterprise in another economy, with the
objective of establishing a lasting interest in the
investee economy.
Types of Retailing in India
• Single Brand- Single brand implies that foreign
companies would be allowed to sell goods sold a
retail store with foreign investment can only sell one
brand .(Adidas, Lee, Nike)
• Multi Brand- FDI in Multi Brand retail implies that a
retail store with a foreign investment can sell multiple
brands under one roof. (Lifestyle, Metro shoes)

4. Types of Retail market
• Organized - trading activities undertaken by
licensed retailers, that is, those who are
registered for sales tax, income tax, etc. Eg:
Corporate backed hypermarkets.
• Unorganized - 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.

5. FDI in Retail
Current Position:
• FDI is permitted only in single brand product
retailing – 100%.(from January 2012)
• In multi brand – 51% (from September 2012)
• FDI cap in Broadcasting was raised to 74% from
49%.

6. Advantages of FDI in Retail
• Improves forex position of the country
• 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.
• Benefits to farmers.

7. Disadvantages of FDI in Retail
• Destroy traditional retail sector.
• Limited Employment Generation. It cannot
provide employment opportunities to semiilliterate people.
• FDI in retail will drain out the country’s share of
revenue to foreign countries, which may cause
negative impact on India’s economy.

8. Impact of FDI in Retail in India
1. Consumers – access to some of the major
global brands.
2. Improved quality and variety of products.
3. Increase competition and expand
manufacturing.
4. It gives consumers competitive advantage.
5. Influences the consumers standard of living.

9. Immense growth opportunities for
Retailers
• India is Asia’s third largest retail market after China
and Japan. Organized retailing is very virgin space in
India.
• Currently Indian Retail sector have sales of around
$500 billion.
• Retail sector is expected to have sales of $900
billion by 2014. It still far behind China, whose retail
sales by 2014 is expected to cross $4500 billion
mark.
• lifestyle products that are widely accepted by the
urban Indian
consumer.(Apparels, Cosmetics, Shoes, Watches, Beverages, Food

10. Submitted by:Ministry of Commerce and Industry
to lok Sabha

12. CUMULATIVE FDI FLOWS INTO
INDIA (2000-2013):
TOTAL FDI INFLOWS (from April, 2000 to October,
2013):
1. CUMULATIVE AMOUNT OF FDI INFLOWS
(Equity inflows + ‘Re-invested earnings’ +‘Other
capital’) *
US$ 309,012 million
2.
CUMULATIVE AMOUNT OF FDI EQUITY
INFLOWS
(excluding, amount remitted through RBI’s-+NRI
Schemes)
US$ 205,885 million

13. FDI Equity Inflow
• Year 2013
(up to October, 2013) #
• Year 2012
(up to October, 2012) #
• %age growth
over last year
104,642 18,079
(in Rs. Cr.) (in US$ mn)
109,781
20,631
(in Rs. Cr.) (in US$ mn)
(-)5%
( - ) 12 %

14. Revised FDI policy
• The government has notified changes in the FDI policy,
paving the way for larger overseas investments in sectors
such as multi-brand retail.
• As per the revised FDI guidelines, the government
relaxed norms for multi-brand retail trading and eased
the mandatory 30 per cent local sourcing norms for
companies. As much as 100 per cent FDI in single-brand
retail was allowed, of which 49 per cent is through the
automatic route.
• The investment cap in defense production was retained
at 26 per cent.
• In courier services, FDI of up to 100 per cent was allowed
under the automatic route.

15. FDI proposals approved till May 2013
• The government approved a total of 18 foreign direct
investment proposals worth USD 173 million in May
2013.
• During April 2010 and May 2013, India also attracted FDI
worth USD 256.7 million in agriculture services.
• As per extant FDI policy, FDI is not permitted in real
estate business. There is no proposal under consideration
to amend the said policy.
• In April, Swedish clothing giant Hennes & Mauritz
received approval to open 50 stores across the country
with a planned investment of Rs700 crore.
• Foreign retailers will now be allowed to open stores in
cities that have a population of less than one million.

16. Recent Trends in FDI
• FDI in specialty stores: Multi-brand organized retail in
specialty stores such as Consumer Electronics,
Footwear, Furniture and Furnishing etc. are expected to
expand and mature in the next few years.(e-zone,
Reliance footprint)
• Dominance of unorganized retail: Flexible credit
options and convenient shopping locations may help
traditional retail to continue its dominance in retail
sector.
• Growth in small cities and towns: Stiff competition and
saturation of urban markets is expected to drive
domestic retail players to tap the potential in small
cities